Answer:
Reserves = $70,000
required reserves = $20,000
Excess Reserves = $50,000
Explanation:
given data
demand deposits = $200,000
outstanding loans = $130,000
reserve requirement = 10%
to find out
Second Republic Reserves and Required Reserves and Excess Reserves
solution
we consider here 3 balance sheet
so here we get reserve that is express by demand deposit that is
demand deposit = Reserves + Outstanding Loan .................1
$200,000 = Reserves + $130,000
Reserves = $70,000
and
required reserves will be here as
required reserves = 10% of demand deposits ................2
required reserves = 10% of $200,000
required reserves = $20,000
and
Excess Reserves will be here as
Excess Reserves = Total Reserves - Required Reserves ............3
Excess Reserves = $70,000 - $20,000
Excess Reserves = $50,000
