A new bank has vault cash of $1 million and $5 million in deposits

held at its Federal Reserve District Bank.

a. If the required reserves ratio is 8 percent, what dollar amount

of deposits can the bank have?

b. If the bank holds $65 million in deposits and currently holds

bank reserves such that excess reserves are zero, what

required reserves ratio is implied?

2. Assume a bank has $5 million in deposits and $1 million in vault

cash. If the bank holds $1 million in excess reserves and the required

reserves ratio is 8 percent, what level of deposits are being held?

3. A bank has $110 million in deposits and holds $10 million in vault

cash.

a. If the required reserves ratio is 10 percent, what dollar

amount of reserves must be held at the Federal Reserve Bank?

b. How would your answer in Part (a) change if the required

reserves ratio was increased to 12 percent?