Suppose that Second Republic Bank currently has $150,000 in demand deposits and $97,500 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%. Reserves=
Required Reserves=
Excess Reserves=
Suppose that Second Republic Bank currently has $150,000 in demand deposits and $97,500 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%. Reserves=
Required Reserves=
Excess Reserves=
Please see attachment .
Explanation:
Please see attachment .
[tex]Suppose that second republic bank currently has $150,000 in demand deposits and $97,500 in outstandi[/tex]
[tex]Suppose that second republic bank currently has $150,000 in demand deposits and $97,500 in outstandi[/tex]
Reserves= $52,500
Required reserves= $15,000
Excess reserves= $37,500
Explanation:
The Second republic bank has $150,000 in demand deposits
They also have $97,500 in outstanding loans
The reserves can be calculated as follows
Reserves= deposits-loans
= $150,000-$97,500
= $52,500
The required reserves can be calculated as follows
Required reserves= deposits × reserve ratio
= $150,000×10/100
= $150,000×0.1
= $15,000
The excess reserves can be calculated as follows
Excess reserves= reserves-required reserves
= $52,500-$15,000
= $37,500
Hence the reserves, required reserves and excess reserves are $52,500, $15,000 and $37,500 respectively