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26 May, 13:03

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?

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  1. 26 May, 14:51
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    Answer: $38,000

    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
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