With a deposit of $500, assuing that the bank places entire amount into LR, both demand deposits and LR increase by $500. Thus RR=$150($1,500 X0.1) and LR=$600. Excess reserves (ER) now equal $450($600-$150), which is the amount the bank can lend.

Question

With a deposit of $500, assuing that the bank places entire amount into LR, both demand deposits and LR increase by $500.  Thus RR=$150($1,500 X0.1) and LR=$600. Excess reserves (ER) now equal $450($600-$150), which is the amount the bank can lend.

precal · Answer

what is LR and RR?

anonymous · Answer

At the start required reserved (RR)=legal reserves(LR)=$100($1,000 X 0.1)

precal · Answer

what are you studying? what math course?  This does not look familiar to me.

precal · Answer

ok let me know when you would like to respond, just trying to help you

anonymous · Answer

Business Math

precal · Answer

Is this part of a finance class?
You might want to repost it and label it Business Math problem.  Hopefully someone will come forth and help.  I do not know or I would help you, sorry  :(

anonymous · Answer

Yes this  a part of a finance class......thanks...  :)