Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result, Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. What dollar value goes in banks (A) and (B), respectively?.

$100 in bank A

$900 in bank B

Explanation:

Since the required reserve ratio is 10%, then bank A can lend up to 90% of the funds to bank B, and must keep the remaining 10%.

If bank B borrowed the money to another client, then they would be able to borrow $900 x 90% = $810, and they should keep $90 as reserves.

a. primarily outdoors, responding to emergencies and protecting people.

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