If First Interstate Bankcorp has demand deposits of $8 billion,actual reserves of $1.4 billion,and the reserve requirement is 15%,the bank's excess reserves are

Question

Quizplus · Accepted Answer

The reserve requirement is 15%, which means that the bank is required to hold 15% of its demand deposits as reserves. This would be $8 billion x 0.15 = $1.2 billion. However, the bank has actual reserves of $1.4 billion, so its excess reserves would be $1.4 billion - $1.2 billion = $200 million. Therefore, the correct answer is choice B.

If First Interstate Bankcorp Has Demand Deposits of $8 Billion,actual