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The excess reserve is the difference between actual and required reserve.

Here the sale of securities is worth $5000. This sale of securities to the Federal Reserves will directly increase the reserves by $5000. Thus, actual reserves will now be equal to the old reserves of $20000 plus new additional reserves of $5000, that is $25000.

Since there was a sale of the security, this transaction will not affect the checkable deposits. Therefore, checkable deposits will remain the same, that is $100000. The required reserves will be 20 percent of this $100000 of checkable deposits. Hence required reserves will be:

$100000×\frac{20}{100}=20000$

Hence, the excess reserve =

The answer in problem 3 was $4000, and this answer is $5000. Therefore, the answer differs by $1000.