Please help with this. 1. Calculate the required reserves and excess reserves wh
ID: 1109214 • Letter: P
Question
Please help with this.
1. Calculate the required reserves and excess reserves when total reserves are S required-reserve ratio is 10% and total checkable deposits are $800,000. e the required 2. What is the required-reserve ratio if e required-reserve ratio if banks are required to hold S240 billion in reserves to support S1,600 billion in deposits? 3. If the required-reserve ratio is 20% and Bank A is holding $15 million in reserves, how much are Bank A's checkable deposits if excess reserves are currently equal to zero?Explanation / Answer
(1)
Required reserves ($) = Checkable deposits x Required reserves ratio = 800,000 x 10% = 80,000
Excess reserves ($) = Total reserves - Required reserves = 100,000 - 80,000 = 20,000
(2)
Required reserves ratio = Required reserves / Checkable deposits = $240 billion / $1,600 billion = 0.15 = 15%
(3)
Checkable deposits ($ Million) = (Required) Reserves / Required reserves ratio = 15 / 0.2 = 75