Consider a central bank policy to maintain 9% reserves on deposits held by commercial banks. A bank, ALFA, currently has $10 million in deposits and holds $1 million in reserves at the central bank. What is the excess reserve ratio? What will be the requirements if the bank is to add $500,000 additional deposits?

Answer rating: 100% (QA)

Since banks needs to maintain 9 ratio Amount they nee... View the full answer