Table 21-4.

-Refer to Table 21-4.If the bank faces a reserve requirement of 10 percent,then the bank
A) is in a position to make a new loan of $15,000.
B) has fewer reserves than are required.
C) has excess reserves of $10,000.
D) None of the above is correct.

Question

Table 21-4.
 
-Refer to Table 21-4.If the bank faces a reserve requirement of 10 percent,then the bank
A) is in a position to make a new loan of $15,000. 
B) has fewer reserves than are required. 
C) has excess reserves of $10,000. 
D) None of the above is correct.

Quizplus · Accepted Answer

The bank has $20,000 in reserves and a reserve requirement of 10% on $100,000 in deposits, which means it needs $10,000 in reserves. Therefore, it has excess reserves of $10,000.

Table 21-4. -Refer to Table 21-4.If the Bank Faces a Reserve Requirement