1. Suppose that Serendipity Bank has excess reserves of $8,000 and checkable deposits of $150,000.
Instructions: Enter your answer as a whole number.
If the reserve ratio is 20 percent, what is the size of the bank's actual reserves? $__________.
2. Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Households deposit $5,000 in currency into the bank and that currency is added to reserves.
Instructions: Enter your answer as a whole number.
What level of excess reserves does the bank now have? $_________.
3. Suppose that Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. The bank sells $5,000 in securities to the Federal Reserve Bank in its district, receiving a $5,000 increase in reserves in return.
Instructions: Enter your answer as a whole number.
What level of excess reserves does the bank now have? $____________.