A bank's excess reserves equal its

Question

Quizplus · Accepted Answer

Excess reserves are the reserves held by a bank in excess of its required reserves. Therefore, excess reserves can be calculated by subtracting the required reserves from the total reserves of the bank. Hence, option B is correct. Option A is incorrect because vault cash is a part of the total reserves, not excess reserves. Option C is incorrect because it gives the formula for calculating the required reserves, not the excess reserves. Option D is incorrect because it includes required reserves, which must be subtracted from total reserves to obtain excess reserves.

A Bank's Excess Reserves Equal Its