Answer:
$64million excess reserve.
Explanation:
We are given the following;
Checkable deposits =$80million
Federal reserve deposits= $15million
Bank vault = $5million
Government bond= $5million
To calculate the excess reserve available, we must first calculate the required reserve
Required reserve = $80million+$15million+$5million+$5million×0.2
= $105million × 0.2
=$21million
Excess reserve will now be
= total reserve - required reserve
= $85million - $21milliion
=$64million
We have $64million as the excess reserve available for the bank to lend.
