Table 21-4.

-Refer to Table 21-4.If the bank faces a reserve requirement of 20 percent,then it
A) has $10,000 of excess reserves.
B) needs $10,000 more reserves to meet its reserve requirements.
C) needs $5,000 more reserves to meet its reserve requirements.
D) just meets its reserve requirement.

Question

Table 21-4.
 
-Refer to Table 21-4.If the bank faces a reserve requirement of 20 percent,then it
A) has $10,000 of excess reserves. 
B) needs $10,000 more reserves to meet its reserve requirements. 
C) needs $5,000 more reserves to meet its reserve requirements. 
D) just meets its reserve requirement.

Quizplus · Accepted Answer

If the reserve requirement is 20%, the bank needs to hold 20% of its deposits as reserves. If it currently does not meet this requirement, it needs $5,000 more reserves to fulfill it.

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