-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, MegaBank will have excess reserves of

Question

Quizplus · Accepted Answer

With Barney's deposit of $50, the bank's total reserves increase by $50. The desired reserve ratio is 3%, so the required reserves for Barney's deposit are 3% of $50, which is $1.50. Therefore, excess reserves are the total new reserves minus required reserves: $50 - $1.50 = $48.50.

-The Above Table Gives the Initial Balance Sheet for Mega