If a bank has deposits of $250 million, reserves that total $30 million and has a required reserve rate of 10 percent:

Question

Quizplus · Accepted Answer

The required reserves can be calculated by taking the deposit amount of $250 million and multiplying it by the required reserve rate of 10 percent:
$250 million x 0.10 = $25 million

Since the bank has reserves of $30 million, it has excess reserves of:
$30 million - $25 million = $5 million.

Therefore, the answer is C.

If a Bank Has Deposits of $250 Million, Reserves That