Final answer:
BSB must raise $8,400 in cash reserves following a $70,000 withdrawal to maintain its required reserve ratio of 12%, adjusted from its original reserves of $1,644,000 to the new required amount of $1,635,600.
Step-by-step explanation:
The Beleaguered State Bank (BSB), which holds $13,700,000 in deposits and maintains a reserve ratio of 12%, has to deal with its largest depositor withdrawing $70,000. Considering BSB is already meeting the reserve requirement, the withdrawal will cause it to lose some of its required reserves. To calculate how much cash reserves BSB needs to raise, we need to consider the reserve requirement ratio and the amount being withdrawn.
Before the withdrawal, BSB's total reserves should be 12% of the total deposits, which is 0.12 × $13,700,000 = $1,644,000. When the depositor withdraws $70,000, the new deposit total becomes $13,630,000, therefore, the required reserves now would be 0.12 × $13,630,000 = $1,635,600. To find out how much the bank needs to raise by the next morning, we subtract the new required reserves from the original reserves: $1,644,000 - $1,635,600 = $8,400.
The Beleaguered State Bank will need to raise $8,400 in cash reserves to comply with the reserve requirement following the $70,000 withdrawal by its largest depositor.