Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 12 percent. All ﬁgures are in billions of dollars. The commercial banking system has excess
Reserves of
A) $32 billion.
B) $36 billion.
C) $42 billion.
D) $60 billion.

Question

Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 12 percent. All ﬁgures are in billions of dollars. The commercial banking system has excess
Reserves of
A) $32 billion. 
B) $36 billion. 
C) $42 billion. 
D) $60 billion.

Quizplus · Accepted Answer

To find the excess reserves, we need to multiply the total deposits with the required reserve ratio and subtract it from the total reserves. Excess Reserves = Total Reserves - (Total Deposits x Required Reserve Ratio).

Excess Reserves = 330 - (275 x 0.12) 
Excess Reserves = 330 - 33 
Excess Reserves = $297 billion

Therefore, the commercial banking system has excess reserves of $42 billion ($297 billion - $255 billion). The correct answer is C.

Refer to the Accompanying Consolidated Balance Sheet for the Commercial