The excess reserve is $30000-7500Been having a bit of trouble with some of the elements in this question...
The question is:
Someone deposits $30,000 into a local bank. The desired reserve ratio is 25%, and the bank was just meeting its desired reserve ratio prior to the deposit.
a) How much of this new deposit will this bank hold in reserve? How much does the deposit create in excess reserves?
I'm pretty sure I got the first part of this right...
Desired Reserves = $30,000 * .25
Desired Reserves = $7,500
Therefore $7,500 would be held in reserve.
But the second part I'm not too sure how to tackle because I don't have the actual reserves