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Assets Liabilities Reserves 250 Deposits   Required __     Transaction (checking) deposits 1000   Excess __      Savings deposits 3000...

Assets Liabilities
Reserves 250 Deposits
  Required __     Transaction (checking) deposits 1000
  Excess __      Savings deposits 3000
Loans    Money Market deposits 500
    Variable rate loans 750 Time deposits (CDs)
    Short-term loans 1600     Fixed rate 500
   Long-term fixed rate loans    2000     Variable rate 100
Securities Borrowing
   Short-term securities 500     Fed funds borrowed 0
   Long-term securities 600


Refer to the bank balance sheet above. Suppose values are in millions of dollars. Assume the reserve requirement is not tiered and is set at 10%. Calculate required reserves. Answer in millions and do not enter a $ sign.

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Answer #1

Required reserve would be on checking deposit only. There would be no reserve requirement on savings deposits, money market funds, or time deposits.

Required reserve = Checking deposits × Rate

                              = 1,000 × 10%

                              = 100 millions (Answer)

[100,000,000]

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