Suppose that Serendipity Bank has excess reserves of 8000 an

Suppose that Serendipity Bank has excess reserves of $8,000 and checkable deposits of $200,000.

Instructions: Enter your answer as a whole number.

If the reserve ratio is 20 percent, what is the size of the bank\'s actual reserves? $.

Solution

Required reserve of bank = 20% of checkable deposits = 20% of 200,000 = 40,000

Excess reserve of bank = 8000

So, Actual reserve of bank = Required reserve + Excess reserve = 40,000 + 8,000 = $ 48000