Third National Bank has reserves of $10,000 and checkable deposits of $100,000. The reserve ratio is 10 percent. Househo...
Third National Bank has reserves of $10,000 and checkable deposits of $100,000. The reserve ratio is 10 percent. Households deposit $15,000 in currency into the bank and that currency is added to reserves.
What level of excess reserves does the bank now have?
Homework Answers
ANSWER:
Checkable deposits = 100,000 + 15,000 = 115,000
Required reserves = reserve ratio * chheckable deposits = 10% * 115,000 = 11,500
Excess reserves = actual reserves - required reserves = (10,000 + 15,000) - 11,500 = 25,000 - 11,500 = 13,500
Excess reserves = $13,500
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