Suppose a bank has $1 million in deposits,a required reserve ratio of 25 percent,and total reserves of $600,000.Then it has excess reserves of

Question

Quizplus · Accepted Answer

Total reserves are given as $600,000, which is 25% of the total deposits ($1 million). This means that the required reserves are $250,000 (25% of $1 million), and the remaining $350,000 are excess reserves. Therefore, the correct answer is choice C.

Suppose a Bank Has $1 Million in Deposits,a Required Reserve