Suppose that National Bank of Guerneville has $34 million in checkable deposits, Commonwealth Bank has $47 million in checkable deposits, and the required reserve ratio for checkable deposits is 10%.
If National Bank of Guerneville has $4 million in reserves and Commonwealth has $5 million in reserves, how much in excess reserves does each bank have?
Now suppose that a customer of National Bank of Guerneville writes a check for $1 million to a real estate broker who deposits the check at Commonwealth. After the check clears, how much in excess reserves does each bank have?