Suppose that the Bank of Apples has excess reserves of $450,000 and checkable deposits of $30,000,000.If the bank has a reserve requirement of 30 percent,what is its total amount of reserves?

Question

Quizplus · Accepted Answer

The reserve requirement percentage is 30%. Therefore, the required reserves of the Bank of Apples are $(30,000,000 x 0.30) = $9,000,000. Since the bank already has excess reserves of $450,000, the total amount of reserves the bank has is equal to its excess reserves plus its required reserves or ($9,000,000 + $450,000) = $9,450,000.

Suppose That the Bank of Apples Has Excess Reserves of $450,000