Respuesta :
If the reserve ratio is 7%, the required reserves is $10,150 and excess reserve is $6, 850.
The reserve ratio, also called cash reserve ratio, refers to the portion of reservable liabilities that commercial banks must hold onto, and is a requirement determined by the country's central bank. The minimum amount of reserves that a bank must hold on to is referred to as the reserve requirement and is given by:
Reserve Requirement = Deposits × Reserve Ratio
As deposits are $145,000 and reserve ratio is 7%, hence
Reserve Requirement = 145000* 0.07 = $10,150
Excess reserves refer to the capital reserves held by a bank or financial institution in excess of what is required by a central bank.
Actual reserve = reserve requirement + excess reserve
Hence, excess reserve = 17000 – 10150 = $6, 850
Note: The question is incomplete. The complete question probably is: Suppose a banking system has $ 145,000 of checkable deposits and actual reserves of $ 17,000. If the reserve ratio is 7% required reserves and excess reserve in the banking system are.
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