Question

when grayce deposits $4,000 cash in her checkable deposit at the beach bank and the beach bank's excess reserves increase by $3,600, the desired reserve ratio is question 21answer a. 15 percent. b. $400. c. 90 percent. d. 10 percent. e. 5 percent.

Answer 1

The desired reserve ratio for the bank when Grayce deposits $4,000 and the excess reserves of the bank increase by $3,600 is 10 percent (option d).

Step-by-step explanation:

When Grayce deposits $4,000 cash in her checkable deposit at the Beach Bank and the Beach Bank's excess reserves increase by $3,600, the desired reserve ratio can be calculated by understanding the difference between the deposit amount and the increase in excess reserves. The reserve ratio is the fraction of total deposits a bank is required to hold in reserve and not lend out.

In this scenario, the reserve that the Beach Bank must hold is the deposit ($4,000) minus the excess reserve increase ($3,600), which equals $400. To find the reserve ratio, we divide the required reserve ($400) by the total deposit ($4,000), and we get 0.10 or 10 percent. Hence, the reserve ratio is 10 percent, which corresponds to option d. 10 percent.