1. National Bank of Guerneville has $____ in excess reserves. 2. Commonwealth Ba
ID: 1151380 • Letter: 1
Question
1. National Bank of Guerneville has $____ in excess reserves.
2. Commonwealth Bank has $_____ in excess reserves.
3. Now suppose that a customer of National Bank of Guerneville writes a check for $____ to a real estate broker who deposits the check at Commonwealth. After the check clears, how much in excess reserves does each bank have?
4. National Bank of Guerneville has $____in excess reserves.
5. Commonwealth Bank has $______ in excess reserves.
Suppose that National Bank of Guerneville has $34 million in checkable deposits, Commonwealth Bank has $45 million in checkable deposits, and the required reserve ratio for checkable deposits is 10%. If National Bank of Guerneville has S4 milion in reserves and Commonwealth ha 55 million im eserve, how much n excess reserves does each bank have? (Enter your answers rounded to one decimal place.) National Bank of Guerneville has S million in excess reserves.Explanation / Answer
Required reserves = (required reserve ratios)*checkable deposits
Excess reserves = Reserves – Required reserves
1) National Bank
Required Reserves = 0.1*34 = $3.4 million
Excess reserves = 4 – 3.4 = $0.6 million
2) Commonwealth Bank
Required Reserves = 0.1*45 = $4.5 million
Excess reserves = 5 – 4.5 = $0.5 million.
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