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17 October, 09:31

First National Bank (FNB) has a reserve ratio of 20 percent, a required reserve ratio of 10 percent, and deposits of $1,000. If FNB receives an additional deposit of $100, Group of answer choices then it has required reserves of $210 and holds excess reserves of $10. then it has required reserves of $10 and holds excess reserves of $20. then it has required reserves of $110 and holds excess reserves of $190. then it has required reserves of $110 and holds excess reserves of $0.

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  1. 17 October, 10:54
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    The correct answer is then it has required reserves of $110 and holds excess reserves of $190.

    Explanation:

    According to the scenario, computation of the given data are as follows:

    Total deposit = $1,000 + $100 = $1,100

    So, we can calculate the total reserve required by using following formula:

    Total reserve required = 10% * Total deposit

    = 10% * $1,100 = $110

    And Previous excess = $100

    Current access = $90

    So, Excess reserve = Previous excess + Current access

    = $100 + $90

    = $190
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