Reserve requirements for banks are currently:
Amount of Bank'sReserve
Transaction DepositsRequirement
The first $6.6 million0 percent
Amounts from $6.6 to $45.4 million3 percent
Amounts over $45.4 million10 percent
Calculate the reserve requirements for three banks with the following amounts of transaction deposits.
a.$38.8 millionb.$95.6 millionc.$3,400 million
What will be an ideal response?
| a. | Required reserves = ($38.8 ? $6.6) × 0.03 = $32.2 × 0.03 = $0.966 million | |
| b. | Required reserves: | |
| ($45.4 ? $6.6) × 0.03 = $38.8 × 0.03 | = $1.164 million | |
| + ($95.6 ? $45.4) × 0.10 = $50.2 × 0.10 | = $5.020 million | |
| = $6.184 million | ||
| c. | Required reserves: | |
| ($45.4 ? $6.6) × 0.03 = $38.8 × 0.03 | = $1.164 million | |
| + ($3400.0 ? $45.4) × 0.10 = $3354.6 × 0.10 | = $335.460 million | |
| = $336.624 million | ||
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