The FUN Bank has no excess reserves when a new deposit of $20,000 is made.The desired reserve ratio is 5 percent.After the deposit,but before making any loans,how much does The FUN Bank have in excess reserves?
A)$1,000
B)$20,000
C)$9,000
D)$19,000
E)$21,000

Question

Quizplus · Accepted Answer

The desired reserve ratio is 5%, so the bank needs to keep $1,000 (5% of $20,000) as reserves. The remaining $19,000 is excess reserves.

The FUN Bank Has No Excess Reserves When a New