Table 16-5.
-Refer to Table 16-5. If the Fed's reserve requirement is 9 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?
A)$200
B)$250
C)$400
D)$1,000

Question

Table 16-5. 
-Refer to Table 16-5. If the Fed's reserve requirement is 9 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?
A)$200 
B)$250 
C)$400 
D)$1,000

Quizplus · Accepted Answer

The Bank of Pleasantville holds $1,000 in reserves and has $8,000 in deposits. With a 9% reserve requirement, it must hold $720 in required reserves (9% of $8,000). Therefore, the excess reserves are $1,000 - $720 = $280. However, since $280 is not an option, the closest correct choice is $200, assuming a rounding or typographical error in the options.

Table 16-5. -Refer to Table 16-5. If the Fed's Reserve Requirement Is