Table 10-2
-Refer to the Table 10-2.If the reserve requirement is 10 percent and then someone deposits $50,000 into the bank,what is the bank's reserve position?
A) It will have $75,000 in excess reserves.
B) It will have $52,500 in excess reserves.
C) It will need to raise reserves by $5000.
D) It will have excess reserves of $2500.

Question

Table 10-2 
-Refer to the Table 10-2.If the reserve requirement is 10 percent and then someone deposits $50,000 into the bank,what is the bank's reserve position?
A) It will have $75,000 in excess reserves. 
B) It will have $52,500 in excess reserves. 
C) It will need to raise reserves by $5000. 
D) It will have excess reserves of $2500.

Quizplus · Accepted Answer

If the reserve requirement is 10 percent, the required reserve amount for a deposit of $50,000 would be 10% of $50,000, or $5,000. The bank's reserve position after the deposit would be:

1. Required reserves: $5,000
2. Excess reserves: $45,000 (the amount deposited minus the required reserves)

Therefore, the bank would have $52,500 ($5,000 + $45,000) in total reserves and $45,000 in excess reserves. Choice B is the closest answer to this calculation.

Table 10-2 -Refer to the Table 10-2.If the Reserve Requirement Is 10