A Bank Has Excess Reserves of $10,000 and Demand Deposit

question 88

Multiple Choice

A bank has excess reserves of $10,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent,the bank's excess reserves will be

• A)-$5,000.
• B)-$1,000.
• C)$1,000.
• D)$5,000.

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