19. required and excess reserves suppose that second republic bank currently has $200,000 in demand deposits and $130,000 in outstanding loans. the federal reserve has set the reserve requirement at 10%. second republic reserves required reserves excess reserves (dollars) (dollars) (dollars)

Reserves = $70,000

required reserves = $20,000

Excess Reserves = $50,000

Explanation:

given data

demand deposits = $200,000

outstanding loans = $130,000

reserve requirement = 10%

to find out

Second Republic Reserves and Required Reserves and Excess Reserves

solution

we consider here 3 balance sheet

so here we get reserve that is express by demand deposit that is

demand deposit = Reserves + Outstanding Loan   1

$200,000  = Reserves + $130,000

Reserves = $70,000

and

required reserves will be here as

required reserves = 10% of demand deposits    2

required reserves = 10% of $200,000

required reserves = $20,000

and

Excess Reserves will be here as

Excess Reserves = Total Reserves - Required Reserves   3

Excess Reserves = $70,000 - $20,000

Excess Reserves = $50,000

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