Given the following information about Gotham Bank:
Bank Deposits $50,000
Loans 34,000
Reserves 12,000
Reserve Requirement 20 percent
Gotham Bank is holding ________ in excess reserves.
A) $22,000
B) $12,000
C) $2,000
D) -$2,000

Question

Quizplus · Accepted Answer

The reserve requirement is 20% of deposits, which is 20% of $50,000 = $10,000. Gotham Bank has reserves of $12,000. Therefore, excess reserves are $12,000 - $10,000 = $2,000.

Given the Following Information About Gotham Bank