If Bank a Holds $200 in Reserves, Deposits Are $1000

question 305

Multiple Choice

If Bank A holds $200 in reserves, deposits are $1000, and the required reserve ratio is 15 percent, how much are excess reserves?

• A) zero, because banks never hold excess reserves
• B) $200
• C) $50
• D) $150

---

Definitions:

Exempt

Freed or relieved from a duty, requirement, or liability to which others are subject.

Security Interest

A legal claim or encumbrance on property or assets, securing the payment of a debt or performance of some other obligation.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay.

Perfected Interest

A legal claim or lien that has been formally established to secure priority over other claims concerning the same asset or property.