Question

A commercial bank has $100 million in checkable-deposit liabilities and $12 million in actual reserves. The required reserve ratio is 10 percent. How big are the bank’s excess reserves? LO33.2a.$100 million.b.$88 million.c.$12 million.d.$2 million.

Answer 1

Given:
Checkable deposit = $100 million
actual reserves = $12 million
required reserve ratio = 10%

100 million * 10% = 10 million
10 million - 12 million = 2 million excess reserves

D.) $2 million is the bank's excess reserves