QUESTION 2 Suppose a bank has $500 million in deposits and reserves of $80 million. If the required reserve ratio is 10 percent, what is the excess reserve level for this bank? A. $80 million B. $30 million C. $0 D. $50 million
QUESTION 2 Suppose a bank has $500 million in deposits and reserves of $80 million. If the required reserve ratio is 10 percent, what is the excess reserve level for this bank? A. $80 million B. $30 million C. $0 D. $50 million
Chapter25: Money Creation
Section: Chapter Questions
Problem 18SQ
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Question
QUESTION 2
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Suppose a bank has $500 million in deposits and reserves of $80 million. If the
required reserve ratio is 10 percent, what is theexcess reserve level for this bank?A. $80 million
B. $30 million
C. $0
D. $50 million
Expert Solution
Step 1
Excess reserves are the deposits which is above the required deposits level.
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