The following is a consolidated balance sheet for the chartered banking system.All figures are in billions.Assume that the desired reserve ratio is 20 percent. Refer to the above information.The amount of excess reserves is:
A)$20 billion.
B)$60 billion.
C)$120 billion.
D)$600 billion.

Question

The following is a consolidated balance sheet for the chartered banking system.All figures are in billions.Assume that the desired reserve ratio is 20 percent.  Refer to the above information.The amount of excess reserves is:
A)$20 billion. 
B)$60 billion. 
C)$120 billion. 
D)$600 billion.

Quizplus · Accepted Answer

Excess reserves can be calculated by subtracting required reserves ($140 billion) from actual reserves ($200 billion):

$200 billion - $140 billion = $60 billion in excess reserves.

The Following Is a Consolidated Balance Sheet for the Chartered