Questions: Three kids in Colorado found a duffel bag containing a relatively large sum of cash in 2005 they were eventually allowed to keep. "The sheriff's office presented checks totaling 98,100 to the parents of the three children." if applicable, the required reserve ratio (RRR) is 10%. Assume, for simplicity, banks lend out all of their excess reserves and all three families and the sheriff's office use the same bank. Initially the sheriff's office deposited the 98,100 of currency into a checking account. The bank's required reserves and its excess reserves → A remained unchanged, remained unchanged B. remained unchanged; Increased by 98,100 C. Increased by 9,810 ; Increased by 88,290 D. Increased by 9,810 ; remained unchanged E. Increased by 88,290 ; increased by 9,810

The answer is C: increased by $9,810; increased by$88,290.

Explanation for each option:

A. remained unchanged; remained unchanged

• This is incorrect because depositing $98,100 into the bank will affect both the required reserves and the excess reserves.

B. remained unchanged; increased by $98,100

• This is incorrect because the required reserves will change when the deposit is made.

C. increased by $9,810; increased by$88,290

• This is correct. When the $98,100 is deposited, the bank must hold 10$9,810. The remaining amount, $88,290, is considered excess reserves that the bank can lend out.

D. increased by $9,810; remained unchanged

• This is incorrect because the excess reserves will also increase by the amount that is not required to be held as reserves.

E. increased by $88,290; increased by$9,810

• This is incorrect because the required reserves should be 10% of the deposit, not the other way around.

Summary: When the sheriff's office deposited $98,100 into a checking account, the bank's required reserves increased by$9,810 (10% of $98,100), and its excess reserves increased by$88,290 (the remaining amount after setting aside the required reserves).