Question

Third national bank has reserves of $20,000 and checkable deposits of $200,000. 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?

Answer 1

Reserves - $20,000
Checkable Deposits - $200,000
Reserves Ratio - 10
Household Deposit - $15,000
Level of Excess Reserves - ?

Solution:
Checkable Deposits = $200,000 + $15,000 = $215,000
Required Reserves = 0.10 x $215,000 = $21,500
Excess Reserves = Actual Reserves - Required Reserves
= $35,000 - $21,500 = $13,500