Table 10-3
The following information pertains to the Bank of Kamloops.
-Refer to the Table 10-3.If the Bank of Canada requires banks to hold 5 percent of deposits as reserves,how much in excess reserves does the Bank of Kamloops now hold?
A) $5
B) $25
C) $60
D) $65

Question

Table 10-3
The following information pertains to the Bank of Kamloops. 
-Refer to the Table 10-3.If the Bank of Canada requires banks to hold 5 percent of deposits as reserves,how much in excess reserves does the Bank of Kamloops now hold?
A) $5 
B) $25 
C) $60 
D) $65

Quizplus · Accepted Answer

To calculate the excess reserves that Bank of Kamloops holds, we need to subtract the required reserve from the actual reserve. 
Actual Reserve = $1,200 
Required Reserve = 5% of Deposits = 5% of $1,200 = $60

Excess Reserves = Actual Reserve - Required Reserve 
= $1,200 - $60 
= $1,140

Therefore, Bank of Kamloops holds $1,140 in excess reserves, which is option C.

Table 10-3 The Following Information Pertains to the Bank of Kamloops