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Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Households deposit $5,000 in currency into the bank and that currency is added to reserves. Instructions: Enter your answer as a whole number. What level of excess reserves does the bank now have?

Respuesta :

Answer:

4,000

Explanation:

If $5,000 added to reserves and is a checkable deposit...

Reserves = 25,000

checkable deposits = 105,000

Required reserve = 0.20 × 105,000

                            = 21,000

Actual reserves = 25,000

excess reserves = Actual reserves - Required reserve

                            = 25,000  - 21,000

                            = 4,000

Excess as percentage of required:

= (4,000 ÷ 21,000) × 100

= 19.047% more reserves than are required .

Actual reserves as % of checkable deposits:

= (25,000 ÷ 105,000) × 100

= 23.81%