The Friendly National Bank holds $50 million in reserves atits Federal Reserve District Bank.

| November 9, 2018

The Friendly National Bank holds $50 million in reserves atits Federal Reserve District Bank. The required reserves ratio is12 percent.a. If the bank has $600 million in deposits, what amount ofvault cash would be needed for the bank to be in compliancewith the required reserves ratio?b. If the bank holds $10 million in vault cash, determine therequired reserves ratio that would be needed for the bank toavoid a reserves de?cit.c. If the Friendly National Bank experiences a required reservesde?cit, what actions can it take to be in compliance with theexisting required reserves ratio?

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