Suppose that a bank has $8,000 in checkable deposits and the required reserve ratio is 0.2.If actual reserves equal $3,000,then excess reserves equal

Question

Quizplus · Accepted Answer

The required reserve ratio is given as 0.2 or 20%. This means that the bank is required to keep 20% of its checkable deposits as reserves.
Reserves = Required Reserves + Excess Reserves
Given: Reserves = $3,000, Required Reserve Ratio = 0.2, Checkable Deposits = $8,000
Required Reserves = 0.2 x $8,000 = $1,600
Excess Reserves = Reserves - Required Reserves = $3,000 - $1,600 = $1,400. 
Therefore, the excess reserves are $1,400.

Suppose That a Bank Has $8,000 in Checkable Deposits and the Required