Best National Bank operates with a 20 percent required reserve ratio. One day a depositor withdraws $500 from his or her checking account at this bank. As a result, the bank's excess reserves:

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With a 20 percent required reserve ratio, the bank must keep $100 of the $500 as required reserves (20% of $500). The remaining $400 would have been part of the bank's excess reserves. When the depositor withdraws $500, the bank loses that amount in reserves entirely, impacting its excess reserves directly. Therefore, the bank's excess reserves fall by the full amount withdrawn, $500, not just the portion beyond the required reserves.

Best National Bank Operates with a 20 Percent Required Reserve