Suppose a commercial bank faces a reserve requirement of 15 percent on all deposits, and a customer makes a new cash deposit of $50,000. Then, it can be said that a new excess reserve of _____ is created.

Question

Quizplus · Accepted Answer

The reserve requirement is 15% of $50,000, which is $7,500. The excess reserve is the remaining amount after the required reserve is set aside, which is $50,000 - $7,500 = $42,500.

Suppose a Commercial Bank Faces a Reserve Requirement of 15