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The desired reserve ratio is 3 percent. Robert deposits​ $3,000 in Bank America. Bank America keeps its minimum desired reserves and lends the excess to Fredrica. How much does Bank America lend to​ Fredrica?

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Answer: $2,910

Explanation:

Bank America is required by law to keep 3% of all deposits as reserves and they can lend the rest which they did to Fredrica.

The amount they lent to Fredrica therefore is;

= 3,000 (1 - 3%)

= 3,000 * 97%

= $2,910

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