Use the balance sheet for the following questions.
Table 29-3

-Refer to Table 29-3.The reserve requirement is 10 percent and then someone deposits an additional $50,000 into the bank,then if the bank takes no other action it will
A)have $65,000 in excess reserves.
B)have $55,000 in excess reserves.
C)need to raise an additional $5,000 of reserves to meet the reserve requirement
D)None of the above is correct.

Question

Use the balance sheet for the following questions.
Table 29-3
 
-Refer to Table 29-3.The reserve requirement is 10 percent and then someone deposits an additional $50,000 into the bank,then if the bank takes no other action it will
A)have $65,000 in excess reserves. 
B)have $55,000 in excess reserves. 
C)need to raise an additional $5,000 of reserves to meet the reserve requirement 
D)None of the above is correct.

Quizplus · Accepted Answer

The bank must keep 10% of $50,000 as required reserves, which is $5,000. The remaining $45,000 is excess reserves. If the bank already had $10,000 in excess reserves, the total excess reserves would be $55,000.

Use the Balance Sheet for the Following Questions