Refer to the information provided in Table 10.4 below to answer the questions that follow.
Table 10.4
-Refer to Table 10.4. If the required reserve ratio were changed to 5% and First Charter Bank continues to hold $1,200,000 in reserves, its excess reserves will be

Question

Refer to the information provided in Table 10.4 below to answer the questions that follow.
Table 10.4 
-Refer to Table 10.4. If the required reserve ratio were changed to 5% and First Charter Bank continues to hold $1,200,000 in reserves, its excess reserves will be

Quizplus · Accepted Answer

If the required reserve ratio is 5%, then the required reserves are 5% of the deposits. Assuming the deposits are $8,000,000 (since $1,200,000 is 15% of $8,000,000), the required reserves would be $400,000 (5% of $8,000,000). Therefore, the excess reserves would be $1,200,000 - $400,000 = $800,000.

Refer to the Information Provided in Table 10