Knowee
Questions
Features
Study Tools

Suppose that Serendipity Bank has excess reserves of $10,000 and checkable deposits of $150,000.  Instructions: Enter your answer as a whole number. If the reserve ratio is 20 percent, what is the size of the bank's actual reserves? $

Question

Suppose that Serendipity Bank has excess reserves of 10,000andcheckabledepositsof10,000 and checkable deposits of 150,000.  Instructions: Enter your answer as a whole number. If the reserve ratio is 20 percent, what is the size of the bank's actual reserves? $

🧐 Not the exact question you are looking for?Go ask a question

Solution

To calculate the actual reserves of the bank, we need to know the reserve ratio and the checkable deposits. The reserve ratio is 20 percent, or 0.20, and the checkable deposits are $150,000.

Step 1: Multiply the checkable deposits by the reserve ratio to find the required reserves.

150,0000.20=150,000 * 0.20 = 30,000

So, the bank is required to have $30,000 in reserves.

Step 2: Add the required reserves to the excess reserves to find the actual reserves.

30,000(requiredreserves)+30,000 (required reserves) + 10,000 (excess reserves) = $40,000

So, the size of the bank's actual reserves is $40,000.

This problem has been solved

Similar Questions

If checkable deposits in Bank A total $100 million and the required reserve ratio is 12%, then required reserves at Bank A equalGroup of answer choices$88.0 million$12.0 million$8.8 million$1.2 million

When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and thebank chooses not to hold any excess reserves but makes loans instead, then, in the bank'sfinal balance sheetA) the assets at the bank increase by $800,000.B) the liabilities of the bank increase by $1,000,000.C) the liabilities of the bank increase by $800,000.D) reserves increase by $160,000.

Suppose that the Fed has set the reserve ratio at 10 percent and that banks collectively have $2 billion in excess reserves. What is the maximum amount of new checkable-deposit money that can be created by the banking system? multiple choice$0.$20 billion.$2 billion.$200 million

The ________ the amount of excess reserves a bank holds, the ________ the size of the deposit multiplier.

Suppose that from a new checkable deposit, First National Bank holds two million dollarsin vault cash, one million dollars in required reserves, and faces a required reserve ratio of tenpercent. Given this information, we can say First National Bank has ________ million dollarsin excess reserves.A) oneB) twoC) nineD) ten

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.