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Bank A has total deposits of $900,000 and total reserves of $112,000
Bank A has total deposits of $900,000 and total reserves of $112,000. If the required reserve ratio is 8 percent, the bank has excess reserves of
Correct Answer
$40,000
$72,000
$13,440
$4,000
Expert Solution
Required reserves= Check-able deposits* Required reserve ratio
= 900000* 8%
= $ 72000
Excess reserves = Reserves - Required reserves
= 112000 - 72000
= $ 40000
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