If a bank has $500,000 in checkable liabilities, the required reserve ratio is 5 percent, and the bank has $100,000 in reserves, then excess reserves are equal to

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Quizplus · Accepted Answer

First, we need to find out the required reserves. Required reserves = checkable liabilities x required reserve ratio 
Required reserves = $500,000 x 0.05 = $25,000 
Next, we can find out excess reserves by subtracting required reserves from actual reserves: 
Excess reserves = actual reserves - required reserves 
Excess reserves = $100,000 - $25,000 = $75,000

If a Bank Has $500,000 in Checkable Liabilities, the Required