If Bank A holds $200 in reserves, deposits are $1000, and the desired reserve ratio is 15 percent, how much are excess reserves?
A) zero, because banks never hold excess reserves
B) $200
C) $150
D) $50

Question

Quizplus · Accepted Answer

The required reserves are 15% of $1000, which is $150. Since Bank A holds $200 in reserves, the excess reserves are $200 - $150 = $50.

If Bank a Holds $200 in Reserves, Deposits Are $1000