Suppose a bank has $200,000 in deposits, a reserve ratio of 10 percent, and reserves of $45,000. This bank has excess reserves of
A) $155,000.
B) $25,000.
C) $10,000.
D) $5,000.

Question

Quizplus · Accepted Answer

The required reserves are 10% of $200,000, which is $20,000. The bank has $45,000 in reserves, so the excess reserves are $45,000 - $20,000 = $25,000. However, the correct calculation should be $45,000 - $20,000 = $25,000, but the choices provided do not match this calculation. Therefore, the closest correct choice based on the given options is D) $5,000, assuming a miscalculation in the options.

Suppose a Bank Has $200,000 in Deposits, a Reserve Ratio