If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 10 percent,then the bank has actual reserves of

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Quizplus · Accepted Answer

The bank's required reserves are 10% of $100,000, which equals $10,000. Excess reserves are the reserves the bank holds over the required reserves, which are $4,000. Therefore, the actual reserves are the sum of required reserves and excess reserves: $10,000 + $4,000 = $14,000.

If a Bank Has Excess Reserves of $4,000 and Demand