Suppose that the Bank of Oranges has excess reserves of $80 million and checkable deposits of $500 million.If the bank has a reserve requirement of 10%,what is the bank's total amount of reserves?

Question

Quizplus · Accepted Answer

The bank's total reserves are the sum of required reserves and excess reserves. Required reserves are 10% of $500 million, which is $50 million. Adding the excess reserves of $80 million gives a total of $130 million.

Suppose That the Bank of Oranges Has Excess Reserves of $80