Solved: What level of excess reserves does the bank now have, Microeconomics

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What level of excess reserves does the bank now have

Discussion:

Suppose that Third National Bank has reserves of $20,000 and checkable deposits of $200,000. The reserve ratio is 10 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?

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