Question

Suppose that Serendipity Bank has excess reserves of $8,000 and checkable deposits of $150,000.Instructions: Enter your answer as a whole number.If the reserve ratio is 20 percent, what is the size of the bank's actual reserves?

Answer 1

Answer: $38,000

Step-by-step explanation:

Required reserves = 20% of checkable deposits

= 20% × 150,000

= $30,000

Actual reserves = Required reserves + Excess reserves

= $30,000 + $8,000

= $38,000

Excess reserves = Actual reserves - Required reserves

= $38,000 - $30,000

= $8,000

Therefore, bank's actual reserves is $38,000