A commercial bank has no excess reserves until a depositor places $2,000 in cash in the bank.The reserve ratio is 10 percent.The bank then lends $1,500 to a borrower.As a consequence of these transactions, the bank's excess reserves are

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When the depositor places $2,000 in the bank, the bank must keep 10% as required reserves, which is $200. The remaining $1,800 is excess reserves. After lending $1,500, the bank's excess reserves are reduced to $300 ($1,800 - $1,500).

A Commercial Bank Has No Excess Reserves Until a Depositor