If the Westminster National Bank has total deposits of $200 billion,has $50 billion in reserves with the Federal Reserve System,and at the same time is required to allocate 20% of its total deposits as required reserves,what are its excess reserves?

Question

Quizplus · Accepted Answer

The required reserves for Westminster National Bank will be 20% of $200 billion, which is $40 billion. However, they have $50 billion in reserves with the Federal Reserve System, which is more than the required reserves. Therefore, they have excess reserves of $10 billion ($50 billion in reserves minus $40 billion in required reserves). Thus, the correct answer is C: $10 billion.

If the Westminster National Bank Has Total Deposits of $200