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4. Suppose again that Third National Bank has reserves of $20,000 and checkable deposits of S100,000. The reserve ratio is 20 percent. The bank now sells $5,000 in securities to the Federal Reserve Bank in its district, receiving a $5,000 increase in reserves in return. What level of excess reserves does the bank now have? By what amount does your answer differ (yes, it does!) from the answer to question 3? LO3

4. Suppose again that Third National Bank has reserves of $20,000 and checkable deposits of S100,000. The reserve ratio is 20 percent. The bank now sells $5,000 in securities to the Federal Reserve Bank in its district, receiving a $5,000 increase in reserves in return. What level of excess reserves does the bank now have? By what amount does your answer differ (yes, it does!) from the answer to question 3? LO3

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4. Suppose again that Third National Bank has reserves of $20,000 and checkable deposits of S100,000. The reserve ratio is 20 percent. The bank now sells $5,000 in securities to the Federal Reserve Bank in its district, receiving a $5,000 increase in reserves in return. What level of excess reserves does the bank now have? By what amount does your answer differ (yes, it does!) from the answer to question 37 LO3
Transcribed Image Text:4. Suppose again that Third National Bank has reserves of $20,000 and checkable deposits of S100,000. The reserve ratio is 20 percent. The bank now sells $5,000 in securities to the Federal Reserve Bank in its district, receiving a $5,000 increase in reserves in return. What level of excess reserves does the bank now have? By what amount does your answer differ (yes, it does!) from the answer to question 37 LO3
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