If the reserve requirement is 20 percent and a new deposit of $10,000 in cash is made by a customer to their checking account, by how much are excess reserves increased?
A)$10,000
B)$8,000
C)$4,000
D)$2,000

Question

Quizplus · Accepted Answer

With a reserve requirement of 20%, the bank must keep $2,000 (20% of $10,000) as required reserves. The remaining $8,000 can be used as excess reserves, which can be loaned out or invested.

If the Reserve Requirement Is 20 Percent and a New