Table 21-5.

-Refer to Table 21-5.If the Fed's reserve requirement is 9 percent,then what quantity of excess reserves does the Bank of Pleasantville now hold?
A) $200
B) $250
C) $400
D) $1,000

Question

Table 21-5.
 
-Refer to Table 21-5.If the Fed's reserve requirement is 9 percent,then what quantity of excess reserves does the Bank of Pleasantville now hold?
A) $200 
B) $250 
C) $400 
D) $1,000

Quizplus · Accepted Answer

The excess reserves are calculated by subtracting the required reserves from the total reserves. If the reserve requirement is 9%, the required reserves are 9% of the deposits. Assuming the deposits are $2,000 (since $2,000 x 9% = $180), and if the total reserves are $380, then the excess reserves are $380 - $180 = $200.

Table 21-5. -Refer to Table 21-5.If the Fed's Reserve Requirement Is 9