Question

g Suppose a commercial bank has checkable deposits of $80,000 and the legal reserve ratio is 20 percent. If the bank's required and excess reserves are equal, then its actual reserves

Answer 1

Answer:

$32,000

Explanation:

The computation is shown below;

Required reserves = checkable deposits × legal reserve ratio

= $80,000 × 20%

= $16,000

Now the actual reserves is

= $16,000 + $16,000

= $32,000

Also excess reserve is equivalent to the required reserves

Hence, the actual reserves is $32,000