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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  1. 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]

  2. 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

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