Answer:
excess reserves after lending = $900
so correct option is C) $900
Explanation:
given data
reserves = $800
reserve ratio = 30%
deposits = $1,000
bank lends = $600
to find out
That bank can lend an additional
solution
first we get required reserves from new deposit that is express as
required reserves = deposit × reserve ratio ......................1
put here value
required reserves = $1000 × 30%
required reserves = $300
and
now excess reserves from new deposits will be
excess reserves = deposits - required reserves .......................2
put here value
excess reserves = $1000 - $300
excess reserves = $700
and
total excess reserves will be here
total excess reserves = old excess reserves + new excess reserves ...........3
put here value
total excess reserves = $800 + $700
total excess reserves = $1500
so that
excess reserves after lending is here express as
excess reserves after lending = excess reserves - amount given to Molly ..........................4
put here value
excess reserves after lending = $1500 - $600
excess reserves after lending = $900
so correct option is C) $900
