Vault cash is equal to $2 million,deposits by depository institutions at the central bank are $1 million,the monetary base is $15 million,and bank deposits are $30 million.Bank reserves are equal to
A)$2 million.
B)$3 million.
C)$5 million.
D)$10 million.

Question

Quizplus · Accepted Answer

Bank reserves are the sum of vault cash and deposits by depository institutions at the central bank, which is $2 million + $1 million = $3 million.
The monetary base is the sum of currency in circulation and bank reserves, which is $15 million = $3 million (bank reserves) + currency in circulation.
Bank deposits are not relevant to calculating bank reserves.

Vault Cash Is Equal to $2 Million,deposits by Depository Institutions