Answer :
The concept mentioned here is about Reserves and many reserve calculations are mentioned. The answer is $35,000, $10,000, and $25,000.
Reserves are part of profits or gains that have been allotted for a specific purpose. Reserves are used to buy fixed assets, pay bonuses, pay an expected legal settlement, pay for repairs & maintenance and pay off debt.
Given,
demand deposits =$100,000
outstanding loan = $65,000
reserve rate = 10%
1) Reserves = Demand Deposits−Loans
Reserves = 100,000 - 65,000
Reserves = $35,000
2) A bank's required reserves are the portion of its demand deposits that it needs to hold in reserves. The amount of required reserves depends on the legal reserve requirement (in this case 10%) set by the Fed.
Required Reserves = Demand Deposits* Required
Required reserves = 100,000 *10%
Required reserves = $10,000
3) Any reserves that a bank holds beyond its required reserves are excess reserves.
Excess reserves = reserves -required reserves
Excess reserve = 35,000-10,000 = $25,000.
So, we can conclude by saying that the reserves are $35,000, $10,000, and $25,000 respectively.
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