A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20 percent. It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank. The ﬁrst bank will
ﬁnd its reserves decrease by

Question

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When the customer writes a check for $8,000 and it is deposited in another bank, the first bank's reserves decrease by the full amount of the check, which is $8,000.

A Commercial Bank Has Excess Reserves of $10,000 and a Required