Table 13-2

-Refer to Table 13-2. If the reserve requirement is 10 percent, then this bank
A)is in a position to make a new loan of $15,000.
B)has less reserves than required.
C)has excess reserves of less than $15,000.
D)none of the above is correct.

Question

Table 13-2
 
-Refer to Table 13-2. If the reserve requirement is 10 percent, then this bank
A)is in a position to make a new loan of $15,000. 
B)has less reserves than required. 
C)has excess reserves of less than $15,000. 
D)none of the above is correct.

Quizplus · Accepted Answer

The bank must keep 10% of its deposits as reserves. If it has excess reserves, it means it has more than the required reserves. Since the bank can only lend out its excess reserves, and the question implies it cannot lend $15,000, its excess reserves must be less than $15,000.

Table 13-2 -Refer to Table 13-2. If the Reserve Requirement Is 10