Suppose a chartered bank has demand deposits of $100,000 and the desired reserve ratio is 10 percent.If the bank's desired and excess reserves are equal, then its actual cash reserves:
A)are $30,000.
B)are $10,000.
C)are $20,000.
D)cannot be determined from the given information.

Question

Quizplus · Accepted Answer

The desired reserves are 10% of $100,000, which is $10,000. Since desired and excess reserves are equal, the excess reserves are also $10,000. Therefore, the actual cash reserves are the sum of desired and excess reserves, which is $20,000.

Suppose a Chartered Bank Has Demand Deposits of $100,000 and the Desired