Suppose that Third National Bank has reserves of $10,000 and checkable deposits of $100,000. The reserve ratio is 10 percent. The bank now sells $15,000 in securities to the Federal Reserve Bank in its district, receiving a $15,000 increase in reserves in return. What level of excess reserves does the bank now have?

The correct answer is $15,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

Checkable deposits = $100,000

 Required reserves = 10% of deposits

Reserves = $100,000 ×10% = $10,000

After selling securities, the reserves increase by $15,000.

So, total reserves =  $10,000 + $15,000 = $25,000

Now, Excess Reserves = Actual Reserves - 10% of Deposits

= $25,000 - $10,000

= $15,000

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

credit history is used by lenders to determine whether you are a 'risky' person to give their money to.

having a short history provide very little data for the lenders. they wouldn't be able to determine your credit behavior from such a small samples. even if they are perfect.

having long credit history with few blemishes provide larger and more accurate data for the lenders to predict your credit behavior.