Answer the question on the basis of the following consolidated balance sheet for the commercial banking system.Assume the required reserve ratio is 10 percent.All figures are in billions. $\begin{array}{c}
\begin{array}{lll}
\quad\quad\quad\underline{\text { Assets}}\
\text { Reserves}\
\text { Securities}\
\text { Loans}\
\text { Property}
\end{array}
\begin{array}{l}
\
\$30\
130 \
70\
200
\end{array}
\begin{array}{lll}
\quad\quad \underline{\text { Liabilities \& Net Worth }}\
\text { Checkable Deposits}\
\text { Stock Shares}\
\
\
\end{array}
\begin{array}{lll}
\
\$300\
130\
\
\
\end{array}
\end{array}$
Refer to the data.After a deposit of $10 billion of new currency into a checking account in the banking system,excess reserves will increase by:
A) $0 billion.
B) $7 billion.
C) $9 billion.
D) $10 billion.

Question

Answer the question on the basis of the following consolidated balance sheet for the commercial banking system.Assume the required reserve ratio is 10 percent.All figures are in billions. $\begin{array}{c}
\begin{array}{lll}
\quad\quad\quad\underline{\text { Assets}}\
\text { Reserves}\
\text { Securities}\
\text { Loans}\
\text { Property} 
\end{array}
\begin{array}{l}
\
\$30\
130 \
70\
200
\end{array}
\begin{array}{lll}
\quad\quad \underline{\text { Liabilities \& Net Worth }}\
\text { Checkable Deposits}\
\text {  Stock Shares}\
\
\
\end{array}
\begin{array}{lll}
\
\$300\
130\
\
\
\end{array}
\end{array}$
 Refer to the data.After a deposit of $10 billion of new currency into a checking account in the banking system,excess reserves will increase by:
A) $0 billion.
B) $7 billion.
C) $9 billion.
D) $10 billion.

Quizplus · Accepted Answer

With a required reserve ratio of 10%, the banking system must hold $160 billion in reserves based on the total checkable deposits of $1,600 billion. After the $10 billion deposit, checkable deposits increase to $1,610 billion. The required reserves will be $161 billion (10% of $1,610 billion). The banking system will have excess reserves of $1 billion ($162 billion - $161 billion). Therefore, excess reserves will increase by $9 billion ($10 billion - $1 billion).

Answer the Question on the Basis of the Following Consolidated