Question

a. ABC Bank has $300,000 of checkable deposits. If the Federal Reserve has a reserve requirement of 12 percent, what is the required reserves? $ b. XYZ Bank has required reserves of $26,050 and excess reserves of $494,950, what is the amount of actual reserves? $

Answer 1

Answer:

Required reserves = $36000

Actual reserves = $521000

Explanation:

given data

check able deposits = $300,000

reserve requirement = 12 percent

required reserves = $26,050

excess reserves = $494,950

to find out

what is the required reserves and amount of actual reserves

solution

we get here Required reserves that is express as

Required reserves = reserve ratio  × check able deposits     ................1

put here value we get

Required reserves = 12%  × $300,000

Required reserves = $36000

and

Actual reserves will be

Actual reserves = required reserves + excess reserves      .................2

Actual reserves = $26,050 + $494,950

Actual reserves = $521000