Suppose the XYZ bank has excess reserves of $4,000 and demand deposits of $80,000.If the required reserve ratio is 25 percent, the banks total reserves equal:

Question

Quizplus · Accepted Answer

The required reserve ratio is 25%, meaning the bank is required to keep 0.25*$80,000 = $20,000 in reserves. Since the bank has excess reserves of $4,000, we can calculate the total reserves by adding the excess reserves to the required reserves: $20,000 + $4,000 = $24,000. Therefore, the correct answer is (C) $24,000.

Suppose the XYZ Bank Has Excess Reserves of $4,000 and Demand