Question

The manager of the bank where you work tells you that your bank has $5 million in excess reserves. She also tells you that the bank has $300 million in deposits and $255 million dollars in loans. Given this information you find that the reserve requirement must be

Answer 1

Answer:

Reserve requirement = 40 / 300

Explanation:

Given:

Excess reserve = $5 million

Total deposit = $300 million

Total loan = $255 million

Computation of reserve requirement:

Reserve requirement = (Total deposit - Excess reserve - Total loan) / Total deposit

Reserve requirement = ($300 - $255 - $5) / $300

Reserve requirement = ($300 - $260) / $300

Reserve requirement = ($40) / $300

Reserve requirement = 40 / 300

Answer 2

Answer:

measured deposits as 40/300

Explanation:

given data

excess reserves = $5 million

deposits = $300 million

loans = $255 million

solution

when  bank not hold anything then there will amount of required reserve will be

amount of required reserve = ( deposit amount -  reserve - loan) ÷ deposit      ...................1

put here value

amount of required reserve =  $\frac{300-255-5}{300}$    

amount of required reserve = $\frac{40}{300}$

so that is measured deposits as 40/300