Please help with this. 1. Calculate the required reserves and excess reserves wh

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.

Checkable deposits = $800000

Required reserve ratio = 10%

Required reserve = Required reserve ratio* Checkable deposits = 10%*800000

Required reserve = $80000

Excess reserve = total reserve – required reserve = 100000 – 80000

Excess reserve = $20000

2.

Required reserve ratio = Required reserve / checkable deposits

Required reserve ratio = 240/1600

Required reserve ratio =15%

3.

Since excess reserve is zero, then the available reserve of $15 million is required reserve.

Checkable deposits = Required reserves / required reserve ratio

Checkable deposits = 15/20%

Checkable deposits = $75 Million

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