# Suppose that Second Republic Bank currently has $150,000 in demand deposits and$97,500 in outstanding

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=

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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