Suppose a credit union has checkable deposits of $500,000 and the legal reserve ratio is 10 percent. If the institution has excess reserves of $4,000, then its actual reserves are
A) $46,000.
B) $50,000.
C) $54,000.
D) $4,000.

Question

Quizplus · Accepted Answer

The required reserves for checkable deposits of $500,000 at a reserve ratio of 10 percent is $50,000 (500,000 x 0.10). Excess reserves are actual reserves minus required reserves, so actual reserves must be $54,000 ($50,000 + $4,000).

Suppose a Credit Union Has Checkable Deposits of $500,000 and the Legal