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Simora [160]
4 years ago
6

A commercial bank has no excess reserves until a depositor places $2,000 in cash in the bank. The reserve ratio is 10 percent. T

he bank then lends $1,500 to a borrower. As a consequence of these transactions, the bank's excess reserves are
A. not affected.
B. increased by $200.
C .increased by $300.
D .increased by $500.
Business
1 answer:
guapka [62]4 years ago
8 0

Answer:

Option (C) is correct.

Explanation:

Based on given information, the bank's excess reserves occurs when $2,000 is deposited in the bank as a form of cash.

The reserve ratio = 10%

                             = 0.1

Bank's reserve = Deposit amount × Reserve ratio

                          = $2000 × 0.1

                          = $200

Bank lends to a borrower = $1500

So, bank's excess reserve:

= Deposit amount - Bank's reserve - Bank's lending amount

= $2,000 - $200 - $1,500

= $300

Therefore, as a consequence of these transactions, the bank's excess reserves are increased by $300.

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2 years ago
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Answer:

Control

Explanation:

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3 years ago
What is capital vocation​
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Answer:

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8 0
4 years ago
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Answer:

Option (B) is correct.

Explanation:

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3 years ago
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