Table 25-1

-Refer to Table 25-1. Suppose a transaction changes a bank's balance sheet as indicated in the T-account, and the required reserve ratio is 10 percent. As a result of the transaction, the bank has excess reserves of

Question

Table 25-1
 
-Refer to Table 25-1. Suppose a transaction changes a bank's balance sheet as indicated in the T-account, and the required reserve ratio is 10 percent. As a result of the transaction, the bank has excess reserves of

Quizplus · Accepted Answer

The bank's excess reserves are calculated by subtracting required reserves (10% of deposits) from total reserves. If the transaction increased reserves by $4,000 and deposits by $40,000, required reserves are $4,000, leaving $3,600 as excess reserves.

Table 25-1 -Refer to Table 25-1. Suppose a Transaction Changes a Bank's