If the reserve requirement is 10 percent, what amount of excess reserves does a bank acquire when a business deposits a $500 check drawn on another bank?
A) $450
B) $400
C) $5,000
D) $550

Question

Quizplus · Accepted Answer

When a business deposits a $500 check, the bank must keep 10% ($50) as required reserves. The remaining $450 is excess reserves, which the bank can lend out.

If the Reserve Requirement Is 10 Percent, What Amount of Excess