00:01
So here we are told that the reserve requirement, which i'll call rr, right, is equal to 20%.
00:08
Now, what does that actually mean? that tells us that 20 % has to be equal to reserves over deposits, right? this 20 % is giving you, however, the required reserves, not the excess reserves.
00:24
This is telling you the required reserves, right? these are the required reserves.
00:29
So we can figure this out very quickly, right? so the required reserves are going to be 20 % times the deposits, right? that's what the reserve requirement is telling you.
00:44
And that is going to be 20 % of 80 ,000, which is equal to 16 ,000, right? so if the deposits are 80 ,000, the bank is required to hold $16 ,000 of reserves.
00:58
Now, reserves are required.
01:05
They can write and excess...