Asked by Mary
A new bank has vault cash of $1 million and $5 million in deposits
held at its Federal Reserve District Bank.
a. If the required reserves ratio is 8 percent, what dollar amount
of deposits can the bank have?
b. If the bank holds $65 million in deposits and currently holds
bank reserves such that excess reserves are zero, what
required reserves ratio is implied?
held at its Federal Reserve District Bank.
a. If the required reserves ratio is 8 percent, what dollar amount
of deposits can the bank have?
b. If the bank holds $65 million in deposits and currently holds
bank reserves such that excess reserves are zero, what
required reserves ratio is implied?
Answers
Answered by
Henry
a. 1/A = 0.08
0.08A = 1
A = $12.5 Million.
b.
0.08A = 1
A = $12.5 Million.
b.
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