Table 11-5.

-Refer to Table 11-5. If the Fed's reserve requirement is 9 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?
A) $200
B) $250
C) $400
D) $1,000

Question

Table 11-5.
 
-Refer to Table 11-5. If the Fed's reserve requirement is 9 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?
A) $200 
B) $250 
C) $400 
D) $1,000

Quizplus · Accepted Answer

The excess reserves are calculated by subtracting the required reserves from the total reserves. If the reserve requirement is 9%, the required reserves are 9% of the deposits. Assuming the deposits are $2,000 (since the options suggest small numbers), the required reserves would be $180. If the total reserves are $380 (since $200 excess reserves would make sense), then the excess reserves are $380 - $180 = $200.

Table 11-5. -Refer to Table 11-5. If the Fed's Reserve Requirement Is