Which of the following is a true statement?
A)excess reserves = actual reserves - required reserves
B)excess reserves = deposits - required reserves
C)excess reserves = deposits - loans
D)excess reserves = loans - required reserves

Question

Quizplus · Accepted Answer

Excess reserves are the reserves held by banks over and above the required reserves. Thus, excess reserves can be calculated by subtracting the required reserves from the actual reserves held by banks. Option A correctly expresses this relationship. Option B is incorrect because deposits do not have a direct relationship with excess reserves. Option C is not correct because excess reserves have no direct relation with the amount of loans issued by the bank. Option D is incorrect because the relationship between loans and excess reserves is inverse.

Which of the Following Is a True Statement