A bank has $10,000 in excess reserves and the required reserve ratio is 20 percent.This means the bank could have __________ in checkable deposit liabilities and __________ in total reserves.

Question

Quizplus · Accepted Answer

The bank could support $100,000 in checkable deposits because with a 20% reserve requirement, $20,000 (20% of $100,000) is required as reserves. Since it has $10,000 in excess reserves, its total reserves must be $30,000 ($20,000 required plus $10,000 excess).

A Bank Has $10,000 in Excess Reserves and the Required