Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the banking system then has
A) excess reserves of $2 billion.
B) neither an excess nor a deﬁciency of reserves.
C) a deﬁciency of reserves of $.5 billion.
D) excess reserves of only $.5 billion.

Question

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The Answer of Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the banking system then has
A) excess reserves of $2 billion.
B) neither an excess nor a deﬁciency of reserves.
C) a deﬁciency of reserves of $.5 billion.
D) excess reserves of only $.5 billion.

Assume That the Commercial Banking System Has Checkable Deposits of $10