A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its excess reserves are

Name: A small commercial bank has $10,000 in actual reserves, $60,000 in deposits, and has a 10 percent desired reserve ratio. Its excess reserves are
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Question

Quizplus · Accepted Answer

The bank's required reserves are 10% of $60,000 in deposits, which equals $6,000. Since it has $10,000 in actual reserves, its excess reserves are $10,000 - $6,000 = $4,000.

A Small Commercial Bank Has $10,000 in Actual Reserves, $60,000