A bank with $1 million in deposits and $50,000 in excess reserves,facing a required reserve ratio of 20 percent,holds total reserves of $250,000.

Name: A bank with $1 million in deposits and $50,000 in excess reserves,facing a required reserve ratio of 20 percent,holds total reserves of $250,000.
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Question

Quizplus · Accepted Answer

The required reserves are 20% of $1 million, which is $200,000. Adding the $50,000 in excess reserves gives total reserves of $250,000.

A Bank with $1 Million in Deposits and $50,000 in Excess