Consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 10 percent.All figures are in billions.

-Refer to the above information.After a deposit of $10 billion of new currency into a chequing account in the banking system,excess reserves will increase by:

Question

Consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 10 percent.All figures are in billions.
 
-Refer to the above information.After a deposit of $10 billion of new currency into a chequing account in the banking system,excess reserves will increase by:

Quizplus · Accepted Answer

The desired reserve ratio is 10%, so the bank will need to hold $1 billion in reserves (10% of $10 billion deposit). Excess reserves will therefore increase by $9 billion ($10 billion deposit - $1 billion required reserves).

Consolidated Balance Sheet for the Chartered Banking System