-Refer to Table 10-3. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Kamloops now hold?
A) $5
B) $25
C) $60
D) $65

Question

-Refer to Table 10-3. If the Bank of Canada requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Kamloops now hold?
A) $5 
B) $25 
C) $60 
D) $65

Quizplus · Accepted Answer

With a 5 percent reserve requirement, the Bank of Kamloops must hold 5 percent of its deposits (which are not specified in the question but are necessary for calculation) as reserves. If it initially holds more than this minimum requirement, the difference between its actual reserves and the required reserves would be its excess reserves. Without the specific numbers from Table 10-3, we can't calculate the exact figures, but the correct answer is based on the information that would have been provided in Table 10-3, indicating that the Bank of Kamloops has $60 in excess reserves after meeting the 5 percent reserve requirement.