Suppose a chartered bank's reserves increase by $3,000 and the bank, which holds no excess reserves, makes a loan of $2,400.What is the desired reserve ratio?

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The desired reserve ratio is calculated by dividing the increase in reserves by the amount of the loan made. In this case, $3,000 / $2,400 = 0.8. However, since the bank made a loan of $2,400 out of its increased reserves of $3,000, it means it kept $600 ($3,000 - $2,400) as reserves. Therefore, the desired reserve ratio is $600 (reserves kept) / $3,000 (total reserves) = 0.20.

Suppose a Chartered Bank's Reserves Increase by $3,000 and the Bank