If a Bank Has Excess Reserves of $7,000 and Demand

question 169

Multiple Choice

If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000,and if the reserve requirement is 10 percent,then the bank has actual reserves of

• A)$14,000.
• B)$17,000.
• C)$22,000.
• D)$27,000.

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Definitions:

Combined Equivalent Value

The total value derived from combining several financial instruments or calculations to understand their overall effect.

Payment Stream

A sequence of payments made over a period of time as per the terms of a financial agreement.

Payable Today

The total amount that is due and needs to be paid immediately or on the current date.

Short-Term Interest Rate

The interest rate charged on loans or realized on investments over a short period, typically less than a year.