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The reserve requirement is 10% and Jack withdraws $5000 travel money from his chequable deposit.Assume that banks do not hold any excess reserves and that the public holds no currency,only chequable bank deposits.
-(Scenario: Money Supply Changes)Refer to Scenario: Money Supply Changes.As a result of the withdrawal,excess reserves _____ by _____.

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The reserve requirement is 10%, so the bank must keep $500 (10% of $5000) as reserves. The remaining $4500 is excess reserves, which decrease by $4500 when Jack withdraws $5000.

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