Suppose the Required Reserve Ratio Is 10

question 125

Multiple Choice

Suppose the required reserve ratio is 10%. If a bank has total reserves of $80,000 and checkable deposits of $550,000, what is the amount of the bank's excess reserves?

• A) $25,000
• B) $55,000
• C) $80,000
• D) $250,000

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Definitions:

Economic Rents

Earnings in excess of the minimum amount required to keep a factor of production in its current use.

Aggregate

A total or combined amount, level, or sum of different components, often used in economics to describe collective economic indicators.

Equilibrium

A state in a market where supply equals demand, and there are no external forces prompting change.

Farmland

Land used for farming and agricultural production.