Final answer:
The bank's excess reserves are calculated by subtracting the required reserves from the actual cash reserves. Given that the bank has $600,000 in deposits and the required reserve ratio is 10%, the required reserves are $60,000, and the excess reserves amount to $240,000.
Step-by-step explanation:
The question is asking to calculate the excess reserves of a bank given its assets and liabilities. To find the excess reserves, we need to determine the total reserves required based on the deposits and then subtract this from the actual cash reserves the bank holds.
The bank's total deposits are $600,000. The required reserve ratio is given as 10%, which means the required reserves are 10% of the total deposits. To calculate the required reserves:
- Required Reserves = Total Deposits x Reserve Ratio
- Required Reserves = $600,000 x 0.10
- Required Reserves = $60,000
From the given assets, we can see that the bank has $300,000 in cash. This is the actual reserves amount the bank has on hand. Now, to find the excess reserves, we subtract the required reserves from the actual cash reserves:
- Excess Reserves = Actual Cash Reserves - Required Reserves
- Excess Reserves = $300,000 - $60,000
- Excess Reserves = $240,000
Therefore, the bank's excess reserves amount to $240,000.