Question
Suppose that National Bank of Guerneville has $35 million in checkable deposits, Commonwealth Bank has $43 million in checkable deposits, and the required reserve ratio
Suppose that National Bank of Guerneville has $35 million in checkable deposits, Commonwealth Bank has $43 million in checkable deposits, and the required reserve ratio for checkable deposits is 10%. If National Bank of Guerneville has $4 million in reserves and Commonwealth has $5 million in reserves, how much in excess reserves does each bank have?
National Bank of Guerneville has:
$0.5 million in excess reserves.
Commonwealth Bank has:
$0.7 million in excess reserves.
1.) Now suppose that a customer of National Bank of Guerneville writes a check for $2 million to a real estate broker who deposits the check at Commonwealth. After the check clears, how much in excess reserves does each bank have?
National Bank of Guerneville has
$1.3 million in excess reserves.
Commonwealth Bank has?
Please show how to get -1.3 and solve for Commonwealth Bank.
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