The Commerce Bank of Beverly Hills has total deposits of $1,000,000 and total reserves of $220,000.The desired reserve ratio is 10 percent.The bank's excess reserves are
A)$22,000.
B)$120,000.
C)$100,000.
D)$80,000.
E)$1,000,000.

Question

Quizplus · Accepted Answer

The desired reserve ratio is 10%, which means the bank needs to hold $100,000 in reserves (10% of $1,000,000). However, they currently have reserves of $220,000, which means they have excess reserves of $120,000. Therefore, the correct answer is B.

The Commerce Bank of Beverly Hills Has Total Deposits of $1,000,000