Suppose the Northwestern Bank has excess reserves of $12,000 and checkable deposits of $125,000. If the reserve requirement is 20 percent, what are the bank's actual reserves?
A) $25,000
B) $37,000
C) $44,000
D) $47,000

Question

Quizplus · Accepted Answer

To find the actual reserves of the bank, we use the formula:

Actual Reserves = Excess Reserves + Required Reserves

Required Reserves = Reserve Requirement x Checkable Deposits

Required Reserves = 0.20 x $125,000 = $25,000

Actual Reserves = $12,000 + $25,000 = $37,000

Therefore, the correct answer is B.

Suppose the Northwestern Bank Has Excess Reserves of $12,000 and Checkable