Assume the Trusty Bank's balance sheet is as follows:

-Refer to the information above to answer this question.If the bank's target reserve ratio is 10%,which of the following is correct?

Question

Assume the Trusty Bank's balance sheet is as follows:
 
-Refer to the information above to answer this question.If the bank's target reserve ratio is 10%,which of the following is correct?

Quizplus · Accepted Answer

If the bank's target reserve ratio is 10%, it means that the bank aims to hold reserves equal to 10% of its deposits. Excess reserves are calculated as actual reserves minus required reserves (which are the deposits multiplied by the reserve ratio). Without specific numbers for the bank's deposits and actual reserves, we can't calculate the exact figures. However, the correct answer indicates that the bank has $9,000 more in reserves than what is required by the 10% reserve ratio, meaning it has excess reserves of $9,000. This suggests that the bank's actual reserves are greater than its required reserves by this amount.

Assume the Trusty Bank's Balance Sheet Is as Follows