BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

Solutions

Chapter
Section
BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

If excess reserves are $4 million and (total) reserves are $6 million, what do required reserves and checkable deposits equal? Assume that the required reserve ratio is 8 percent.

To determine

Identify the required reserves and the checkable deposits.

Explanation

The total reserve is the sum total of required reserves and excess reserves. Since, the total reserves is $6 million and the excess reserves is $4 million, the required reserve will be $2 million ($6$4)

The required reserve can be calculated by using the following formula:

Since, the required reserves is $2 and the required reserve ratio is 8% the value of checkable deposit can be calculated as follows:

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Profit margins and turnover ratios vary from one industry to another. What differences would you expect to find...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

How does standard costing improve the control function?

Managerial Accounting: The Cornerstone of Business Decision-Making

Define the three processes of the process value chain.

Cornerstones of Cost Management (Cornerstones Series)

Using the work sheet provided in Checkpoint Exercise 1, prepare closing entries in general journal form.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)