The following demand deposits and cash reserves at the Fed have been documented by a bank for the computation of reserve requirements (in millions). Note that reserves are vault cash and reserves at the Fed.
-What are the average daily demand deposit balances over the reserve computation period beginning the week of June 12?
A)$286 million.
B)$296 million.
C)$306 million.
D)$326 million.
E)$352 million.

Question

The following demand deposits and cash reserves at the Fed have been documented by a bank for the computation of reserve requirements (in millions). Note that reserves are vault cash and reserves at the Fed. 
-What are the average daily demand deposit balances over the reserve computation period beginning the week of June 12?
A)$286 million. 
B)$296 million. 
C)$306 million. 
D)$326 million. 
E)$352 million.

Quizplus · Accepted Answer

To calculate average daily demand deposit balances, we need to take the sum of all the demand deposits and divide it by the number of days in the reserve computation period. The reserve computation period is usually a two-week period. Looking at the data provided, the sum of demand deposits from the weeks of June 12 and June 19 is $592 million. Dividing this by 14 days (two weeks) gives us an average daily demand deposit balance of $296 million. Therefore, the answer is B, $296 million.

The Following Demand Deposits and Cash Reserves at the Fed