Ask Question
19 August, 10:50

Suppose that National Bank of Guerneville has $33 million in checkable deposits, Commonwealth Bank has $41 million in checkable deposits, and the required reserve ratio for checkable deposits is 10%. If National Bank of Guerneville has $4 million in reserves and Commonwealth has $5 million in reserves, how much in excess reserves does each bank have?

+2
Answers (1)
  1. 19 August, 12:57
    0
    National Bank of Guerneville : $4mn - $3.3mn = $0.7 million.

    Commonwealth Bank : $5mn - $4.1mn = $0.9 million.

    Explanation:

    Since the reserve ration for the checkable deposits is 10%, that means the National bank of Guerneville has to maintain $3.3 million in the reserves, while it maintains $4 million, hence excess of $0.7 million.

    Secondly, Commonwealth bank has to maintain $4.1 million in the reserves, while it maintains $5 million, hence excess of $0.9 million.

    Hope this clear things up.

    Good Luck.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose that National Bank of Guerneville has $33 million in checkable deposits, Commonwealth Bank has $41 million in checkable deposits, ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers