Suppose a bank has $8,000 in checkable deposits and the required reserve ratio is 0.2.If actual reserves equal $3,000,then excess reserves equal:

Question

Quizplus · Accepted Answer

The required reserve ratio is 0.2 which means that the bank must keep 20% of the checkable deposits in reserves. In this case, the required reserves would be:
0.2 x $8,000 = $1,600
The actual reserves are given as $3,000 which means that the excess reserves would be:
$3,000 - $1,600 = $1,400
Therefore, the correct answer is B) $1,400.

Suppose a Bank Has $8,000 in Checkable Deposits and the Required