A bank has deposits of $100,000,reserves of $20,000,and loans of $80,000.If the desired reserve ratio is 10 percent,then its excess reserves are
A)0.
B)$8,000.
C)$10,000.
D)$2,000.
E)$12,000.

Question

Quizplus · Accepted Answer

The desired reserve ratio is 10%, which means that the bank needs to hold reserves of 10% of its deposits.
Reserves = 10% of $100,000 = $10,000
Actual reserves = $20,000
Excess reserves = Actual reserves - Required reserves = $20,000 - $10,000 = $10,000. 
Therefore, the answer is (C) $10,000.

A Bank Has Deposits of $100,000,reserves of $20,000,and Loans of $80,000.If