A bank holds$7for every $100 in deposits. The bank wants to hold$6for every $100 in deposits. The bank holdsdesired reservesof$6,000andexcess reservesof$4,000. What is the actual reserve ratio, the desired reserve ratio, and theactual reserves? >>> Answer to 2 decimal places.The actual reserve ratio is The desired reserve ratio is Theactual reservesare$

Reserve ratio = (Reserve requirement)/(bank deposits) × 100%

Answered: A bank holds $7 for every $100 in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A bank holds

for every $100 in deposits.

The bank wants to hold

for every $100 in deposits.

The bank holds

desired reserves

$6,000

and

excess reserves

$4,000.

What is the actual reserve ratio, the desired reserve ratio, and the

actual reserves?

>>> Answer to 2 decimal places.

The actual reserve ratio is

The desired reserve ratio is

The

actual reserves

are

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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