A commercial bank has actual reserves of $50,000 and checkable deposits of $200,000, and the required reserve ratio is 20%

Economics May 05, 2021

A commercial bank has actual reserves of $50,000 and checkable deposits of $200,000, and the required reserve ratio is 20%. The excess reserves of the bank are:

Expert Solution

Computation of the excess reserves:-

Required reserves = Checkable deposits * Required reserve ratio

= $200,000 * 20%

= $40,000

Excess reserves = Actual reserves - Required reserves

= $50,000 - $40,000

= $10,000

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