Suppose that Third National Bank has reserves of $20,000 and check able deposits of $200,000. The reserve ratio is 10 percent. The bank sells $20,000 in securities to the Federal Reserve Bank in its district, receiving a $20,000 increase in reserves in return.
What level of excess reserves does the bank now have?
Suppose that Third National Bank has reserves of $20,000 and check able deposits of $200,000. The reserve ratio is 10 percent. The bank sells $20,000 in securities to the Federal Reserve Bank in its district, receiving a $20,000 increase in reserves in return.
What level of excess reserves does the bank now have?