Question

A bank has $132,000 in excess reserves and the required reserve ratio is 11 percent. This means the bank could have __________ in checkable deposit liabilities and __________ in (total) reserves.

Answer 1

Answer:

Explanation:

Reserve Ratio is the amount of liabilities that are held reserved by the commercial banks. The ratio indicated the amount which the bank has to hold as a reserve. Any amount in access of this ratio can be invested or held in bank reserves.

So in this question, the reserve ratio is 11%, of $132000, which is 14520 dollars. So 117480 dollars are left which can be invested to deposited in the total reserves. So A bank has $132000 in excess reserves and the required reserve ratio is 11%. This means the bank could have $14520 in checkable deposit liabilities and $117480 in total reserves.