A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its excess reserves are

Question

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A desired reserve ratio of 10 percent means that the required reserves for the bank are 10 percent of its deposits, or $6,000. The actual reserves of $10,000 exceed this amount, so the bank has excess reserves of $4,000 ($10,000 - $6,000).

A Small Commercial Bank Has $10,000 in Actual Reserves, $60,000