Table 14-1

-Refer to Table 14-1.Suppose a transaction changes a bank's balance sheet as indicated in the T-account,and the required reserve ratio is 10 percent.As a result of the transaction,the bank has excess reserves of
A)$0.
B)$400.
C)$3,600.
D)$4,000.

Question

Table 14-1
 
-Refer to Table 14-1.Suppose a transaction changes a bank's balance sheet as indicated in the T-account,and the required reserve ratio is 10 percent.As a result of the transaction,the bank has excess reserves of
A)$0. 
B)$400. 
C)$3,600. 
D)$4,000.

Quizplus · Accepted Answer

Given a required reserve ratio of 10%, the bank must keep 10% of its deposits as reserves. Without the specific details from Table 14-1, we can deduce the correct answer based on the information provided in the choices. If the bank has excess reserves of $3,600, it means that after setting aside 10% of its deposits as required reserves, the additional money it can lend out or use is $3,600. This implies that the transaction increased the bank's reserves more than what was needed for the 10% reserve requirement on new deposits.

Table 14-1 -Refer to Table 14-1.Suppose a Transaction Changes a Bank's Balance