Question 36 , Thank you
Cash held by a bank in its vault is a part of the bank’s: Rescues Net worth Liabilities Money supply A checkable deposit at a commercial bank is a(n): Asset to both the depositor and the bank Asset to the depositor and a liability to the bank Liability to the depositor and an asset to the bank Liability to both the depositor and the bank A commercial bank has excess reserves of $5000 and a required reserve ratio of 20 percent. It makes a loan of $6000 to a borrower. The borrower writes a check for $6000 that is deposited in another commercial bank. After the check clears, the first bank will be short of reserves in the amount of: $1000 $6000 $5000 $1200 A bank’s required reserves can be calculated by: Multiplying its checkable-deposit liabilities by the reserve ratio Dividing its excess reserves by its required reserves Multiplying its checkable-deposit liabilities by its excess reserves Dividing its required reserves by its excess reserves When a bank grants a loan to a customer who gets the funds and keeps it at home for a
CRR = 5000*20/100 = $ 1000
Thus after the withdrawal of $6000 the bank is short of $1000 reserves.