A commercial bank has reserves of $64, loans of $521 and checkable deposits of $585. The...
A commercial bank has reserves of $64, loans of $521 and checkable deposits of $585. The bank experiences a cash outflow of $11. If the required reserve ratio is 7%, what are the bank's excess reserves after the outflow?
Homework Answers
Answer
New checkable deposits =585-11
=574
Required reserves =checkable deposits * required reserve ratio
=574*0.07
=40.18
New reserves =old reserves - cash outflow
=64-11
=53
Excess reserves =new reserves - required reserves
=53-40.18
=12.82
The excess reserves are $12.82
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