Answer:
The first bank will be short of reserves in the amount of $1,000
Explanation:
According to the given data, we have the following:
bank excess reserves=$5,000
reserve ratio=20%
Total Reserve= $5000+(20%*$5,000)= $6,000
Therefore, to calculate the reserve shortage we would have to make the following calculation:
reserve shortage=$6,000 - $5,000 = $1,000
The first bank will be short of reserves in the amount of $1,000
Answer:
$1,000
Explanation:
To this calculation, we can use the following method
The bank has excess reserve of = $5,000
Loan been made to a borrower = $6,000
The amount that it will be short of it reserve is = Loan been made to a borrower - The bank has excess reserve
= $6,000 - $5,000
= $1,000