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24 September, 02:40

Bank A has checkable deposits of $10 million and total reserves of $1 million. The required reserve ratio is 9 percent. The bank has excess reserves of

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  1. 24 September, 03:23
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    The bank has excess reserves of $100,000.

    Explanation:

    The deposits here are $10 million.

    The required reserve ratio is 9%.

    The required reserve will be,

    =reserve ratio*total deposits

    =9/100*$10,000,000

    =$900,000

    Here, the required reserve is $900,000.

    So, the excess reserve will be,

    =total reserve - required reserve

    =$ (1,000,000-900,000)

    =$100,000
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