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A depositor places $750 in cash in a commercial bank, and the reserve ratio is 33 1/3%; the bank sends the $750 to the Federal Reserve Bank. As a result, the reserves and excess reserves of the bank have been increased, respectively, by:
a. $750 and $250
b. $750 and $500
c. $750 and $750
d. $500 and $500

Respuesta :

Answer:

b. $750 and $500 

Explanation:

The reserves is the amount of deposit required by the Central bank that banks should keep as reserves.

The excess reserve is the amount left after the reserve has been taken from the deposit.

If deposit is $750 and the reserve ratio is 331/3%, the amount of reserves is 0.333 × 750 =$250

Excess reserve = $750 - $250 = $500

But the bank sent $750 as reserves, so the reserve increases by $750 and the excess reserve increases by $500

I hope my answer helps you.

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