Suppose the banking system currently has $300 billion in reserves; the reserve requirement is 10 percent; and excess reserves amount to $3 billion. What is the level of deposits?
A)$3,300 billion
B)$2,970 billion
C)$2,700 billion
D)$2,673 billion

Question

Quizplus · Accepted Answer

The total reserves are $300 billion, with $3 billion as excess reserves. Required reserves are $297 billion ($300 billion - $3 billion). With a reserve requirement of 10%, the level of deposits is $2,970 billion ($297 billion / 0.10).

Suppose the Banking System Currently Has $300 Billion in Reserves;