Assume a commercial bank has demand deposits of $2,000,000 and excess reserves of $50,000.If the target reserve ratio is 10 percent,then what are the bank's actual reserves?

Question

Quizplus · Accepted Answer

The target reserve ratio is 10%, meaning that the bank should hold $200,000 ($2,000,000 x 0.10) in reserves. The excess reserves are already given as $50,000, so the actual reserves would be $250,000 ($200,000 + $50,000). Therefore, choice (C) is the correct answer.

Assume a Commercial Bank Has Demand Deposits of $2,000,000 and Excess