Suppose that Hanover Bank has total deposits of $4,000 and $4,000 in total reserves. If the reserve requirement is 20 percent, then the bank will have $3,200 in excess reserves and $800 in required reserves.

Question

Quizplus · Accepted Answer

To calculate the required reserves, we simply multiply the deposits by the reserve requirement percentage: $4,000 x 0.20 = $800.

The excess reserves are calculated by subtracting the required reserves from the total reserves: $4,000 - $800 = $3,200.

Suppose That Hanover Bank Has Total Deposits of $4,000 and $4,000