If a bank that faces a 25 percent reserve ratio received a deposit of $30,000 andmakes a loan to a customer for $10,000, what is the consequence if the bank thendeposits the rest of the funds at the Federal Reserve?Excess reserves increase by $30,000.Excess reserves increase by $20,000 and required reserves increase by $10,000.Excess reserves increase by $12,500 and required reserves increase by $7,500.Required reserves increase by $17,500.Reserves are not affected.

The Reserve ratio is the portion of the total amount that a bank has to reserve.

If a bank that faces a 25 percent reserve ratio received a deposit of $30,000 and makes a loan to a customer for $10,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve? Excess reserves increase by $30,000. O Excess reserves increase by $20,000 and required reserves increase by $10,000. O Excess reserves increase by $12,500 and required reserves increase by $7,500. Required reserves increase by $17,500. Reserves are not affected.

If a bank that faces a 25 percent reserve ratio received a deposit of $30,000 and makes a loan to a customer for $10,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve? Excess reserves increase by $30,000. O Excess reserves increase by $20,000 and required reserves increase by $10,000. O Excess reserves increase by $12,500 and required reserves increase by $7,500. Required reserves increase by $17,500. Reserves are not affected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are given the following T-account for PNC Bank. Reserves are $20,000, Loans are $15,000, and Demand Deposits are $35,000. The FED has set the required reserve ratio of 25%. Use previous information to solve for excess reserves? $0 $3,750 $11,250 O $17,500
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