If a check was written on Bank A for $100 and Bank B presented the check to Bank A for payment, what will happen to the required reserves for each respective bank after payment is made?

Question

Quizplus · Accepted Answer

When Bank B presents the check to Bank A for payment, Bank A's reserves will decrease by $100 as they pay out the funds. This means Bank A's required reserves will also decrease. On the other hand, when Bank B receives the $100, their reserves will increase by that amount, causing an increase in their required reserves. Therefore, Bank B's required reserves will increase, while Bank A's will decrease.

If a Check Was Written on Bank a for $100