Scenario 10.2
Imagine that Kristy deposits $10,000 of currency into her chequing account deposit at Bank A and that the desired reserve ratio is 20%.
-Refer to Scenario 10.2.As a result of Kristy's deposit, Bank A's excess reserves increase by

Question

Quizplus · Accepted Answer

The desired reserve ratio is 20%, so Bank A must hold $2,000 of Kristy's deposit as required reserves (0.20 x $10,000 = $2,000). Therefore, Bank A's excess reserves increase by the remaining amount, which is $8,000 (i.e. $10,000 - $2,000 = $8,000).

Scenario 10.2 Imagine That Kristy Deposits $10,000 of Currency into Her Chequing