Suppose first main street bank, second republic bank, and third fidelity bank all have zero excess reserves. the required reserve ratio is 20%. the federal reserve buys a government bond worth $1,500,000 from gilberto, a customer of first main street bank. he deposits the money into his checking account at first main street bank.

The question is incomplete! Complete question along with answer and explanation is provided below.  

Question:  

Suppose first main street bank, second republic bank, and third fidelity bank all have zero excess reserves. the required reserve ratio is 20%. the federal reserve buys a government bond worth $1,500,000 from gilberto, a customer of first main street bank. he deposits the money into his checking account at first main street bank.

Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 20%.

Amount Deposited  | Excess Reserves  | Required Reserves

Given Information:

Deposit amount = $1,500,000

Required Reserve Ratio = 20%

Required Information:

Required Reserves  = ?

Excess Reserves  = ?

Required Reserves  = $300,000

Excess Reserves  = $1,200,000

Explanation:

The required reserves are calculated using

Required Reserves  = Deposit Amount x Required Reserve Ratio

Required Reserves  = $1,500,000 x 0.20

Required Reserves  = $300,000

The excess reserves are calculated using

Excess Reserves  = Deposit Amount - Required Reserves

Excess Reserves  = $1,500,000 - $300,000

Excess Reserves  = $1,200,000

The bank can use these excess reserves to make loans.

Amount Deposited   |  Excess Reserves   |  Required Reserves

      $1,500,000        |       $1,200,000      |         $300,000

answer; tech (a) is correct;