18.Suppose TD Bank has a target reserve ratio of 2%. If it receives a new deposit of $40 million it will immediately find itself with excess cash reserves of $20 million. excess cash reserves of $39 million. excess cash reserves of $8 million. excess cash reserves of $39.2 million. no excess cash reserves.

Given target reserve ratio = 2 percent

Answered: . Suppose TD Bank has a target reserve…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter25: Money Creation

Section: Chapter Questions

Problem 18SQ

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18.

Suppose TD Bank has a target reserve ratio of 2%. If it receives a new deposit of $40 million it will immediately find itself with

		excess cash reserves of $20 million.
		excess cash reserves of $39 million.
		excess cash reserves of $8 million.
		excess cash reserves of $39.2 million.
		no excess cash reserves.

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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