Answer to Question #231436 in Macroeconomics for Money

Question

MR Bank has the following balance sheet:

 

Table 3: MR Bank balance sheet

Assets

Required Reserves X            

Excess Reserves R50 million

Liabilities

Deposits            Y            

The required reserve ratio is 10%. What is the value of MR bank’s deposits?

 

R 45 million.

R 10 million.

R 55.6 million.

R 50 million.

Answer 1

$$solution$$

$required \ reserve \ of \ 10\%\\ excess \ reserve\ of \ 50\ million \\ A\\ excess \ reserve=actual \ reserve\ -required \ reserve\\ deposit=45m+50m=95\\ B\\ 50m+10m=60m\\ C\\ 50m+55.6m=106.6m\\ D\\ 50m+50m=100m$