A bank holds $130 million in the form of transaction and time and savings deposits. Its reserve deposit at the Federal Reserve bank during the current reserve maintenance period contains a daily average balance of $4 million and its vault cash holdings have averaged daily $0.40 million for several weeks running.
Calculate its required reserves and excess reserves if deposits are subject to a 5 percent legal reserve
requirement. Now suppose the bank elects to buy $1 million in Treasury bills from the Fed. Do you see
any problem with this?

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The Answer of A bank holds $130 million in the form of transaction and time and savings deposits. Its reserve deposit at the Federal Reserve bank during the current reserve maintenance period contains a daily average balance of $4 million and its vault cash holdings have averaged daily $0.40 million for several weeks running.
Calculate its required reserves and excess reserves if deposits are subject to a 5 percent legal reserve
requirement. Now suppose the bank elects to buy $1 million in Treasury bills from the Fed. Do you see
any problem with this?

A Bank Holds $130 Million in the Form of Transaction