If a commercial bank has demand deposits of $300 million, actual reserves of $40 million, and a reserve requirement of 10 percent, the bank has excess reserves of:

Question

Quizplus · Accepted Answer

The bank's required reserves are 10% of $300 million, which is $30 million. Since it has actual reserves of $40 million, the excess reserves are $40 million - $30 million = $10 million.

If a Commercial Bank Has Demand Deposits of $300 Million