The table given below shows the assets and liabilities of the National Bank.Assume that this is the only bank in the economy. Table 13.2
Refer to Table 13.2 and calculate the legal reserves of the bank.
A)$425
B)$5, 450
C)$1, 725
D)$2, 150
E)$1, 500

Question

The table given below shows the assets and liabilities of the National Bank.Assume that this is the only bank in the economy. Table 13.2
 Refer to Table 13.2 and calculate the legal reserves of the bank.
A)$425 
B)$5, 450 
C)$1, 725 
D)$2, 150 
E)$1, 500

Quizplus · Accepted Answer

Legal reserves are calculated as 10% of total deposits. In this case, total deposits are $21,500 (sum of demand deposits and time deposits). 10% of $21,500 is $2,150. Therefore, the legal reserves of the bank are $2,150. Option D is the correct answer.

The Table Given Below Shows the Assets and Liabilities of the National