If excess reserves are $25,000,demand deposits are $100,000,and the minimum reserve requirement is 20 percent,then total reserves are:

Question

Quizplus · Accepted Answer

Total reserves include both required reserves and excess reserves. Required reserves are calculated as a percentage of demand deposits, which in this case would be 20% of $100,000, or $20,000. Excess reserves are any reserves held above and beyond the required amount, so in this case it would be the remaining $5,000 ($25,000 - $20,000). Thus, total reserves would be the sum of required reserves and excess reserves, or $20,000 + $5,000 = $45,000.

If Excess Reserves Are $25,000,demand Deposits Are $100,000,and the Minimum