Final answer:
Robina Bank must keep $3,275.34 on hand as required reserves from a $54,589 deposit when the reserve requirement is 6%. The bank has $51,313.66 in excess reserves. Changes in the M1 money supply depend on the lending activities resulting from these excess reserves, but as of March 2020, reserve requirements have been reduced to 0%.
Step-by-step explanation:
When Robina Bank receives a deposit of $54,589 and the reserve requirement is set at 6%, it must calculate how much to keep on hand as required reserves and how much is available as excess reserves. To calculate the required reserves, the bank multiplies the deposit by the reserve ratio:
Required reserves = Deposit amount x Reserve ratio
Required reserves = $54,589 x 0.06 = $3,275.34
This is the amount that must be kept on hand. The excess reserves are the total deposits minus the required reserves:
Excess reserves = Total deposits - Required reserves
Excess reserves = $54,589 - $3,275.34 = $51,313.66
In terms of the impact on the M1 money supply, this single deposit can potentially increase the money supply by the amount of excess reserves multiplied by the money multiplier (not given in the problem). However, since the required reserves are not loaned out or invested, they do not directly change the money supply. Thus, the total change in the M1 money supply is the amount the bank can lend out, which is the excess reserves.
However, it is important to note that as of March 2020, the Federal Reserve eliminated reserve requirements, reducing them to 0%. This means that, in reality, banks are no longer constrained by this calculation for the time being.