Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of
$75,000 is made. Immediately after the deposit is made, the bank's excess reserves equal

Question

Quizplus · Accepted Answer

The bank's required reserves are 10% of $75,000, or $7,500. Since the bank is exactly meeting its desired reserve ratio, its excess reserves before the deposit were $0. After the deposit, the bank's excess reserves are $75,000 - $7,500 = $67,500.

Suppose a Bank Is Exactly Meeting Its Desired Reserve Ratio