Sumit deposits $1,500 cash into his checking account, which his bank puts in the vault. The reserve requirement is 25%. What is the change in his bank's excess reserves?

Name: Sumit deposits $1,500 cash into his checking account, which his bank puts in the vault. The reserve requirement is 25%. What is the change in his bank's excess reserves?
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Question

Quizplus · Accepted Answer

The reserve requirement is 25%, so the bank must keep $375 (25% of $1,500) as required reserves. The remaining $1,125 is excess reserves.

Sumit Deposits $1,500 Cash into His Checking Account, Which His