Reserve requirements for banks are currently: Amount of Bank's Reserve Transaction Deposits Requirement The first $6.6...
Reserve requirements for banks are currently:
Amount of Bank's Reserve
Transaction Deposits Requirement
The first $6.6 million 0 percent
Amounts from $6.6 to $45.4 million 3 percent
Amounts over $45.4 million 10 percent
Calculate the reserve requirements for a bank with $95.6 million of transaction deposits.
Homework Answers
Solution:
It is given that there are three slabs of % of reserve requirement .
Total amount is $95.6 million
1. Upto $6.6 million, reserve = 0%
2. $6.6 to $45.4, reserve = 3%. $45.4-$6.6 = $38.8
Reserve = 3% * 38.8 = $1.164 million
3. More than $45.4, reserve 10% ,. $95.6 - $45.4 = 50.2
Reserve = 10% * 50.2 = 5.02
Total reserve requirement = 0 + 1.164 + 5.02 = $6.184 Million
Current answer is $6.184 million
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