Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of
$75,000 is made. Immediately after the deposit is made, the bankʹs excess reserves equal
A) $7,500.
B) $67,500.
C) zero.
D) It is impossible to determine without additional information.

Question

Quizplus · Accepted Answer

The bank must keep 10% of the new deposit as reserves, which is $7,500. The remaining $67,500 is excess reserves.

Suppose a Bank Is Exactly Meeting Its Desired Reserve Ratio