The RDW Bank has deposits of $250 million, excess reserves of $50 million, and a reserve requirement of 20 percent. RDW Bank's actual reserves are:

Question

Quizplus · Accepted Answer

RDW Bank's actual reserves include its excess reserves plus the required reserves. The required reserves can be calculated as 20% of the deposits, which is 0.20 * $250 million = $50 million. Therefore, the actual reserves are the excess reserves ($50 million) plus the required reserves ($50 million), totaling $100 million.

The RDW Bank Has Deposits of $250 Million, Excess Reserves