Assume That the Required Reserve Ratio Is 5 Percent

question 41

Multiple Choice

Assume that the required reserve ratio is 5 percent.If a commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the Fed, and $60 million in checkable deposits, then its excess reserves equal

• A)$0 million.
• B)$2 million.
• C)$5 million.
• D)$6 million.

---

Definitions:

Balance

The state of having equal distribution of weight or amount, or the ability to maintain equilibrium.

Evaluates

The process of assessing or examining something to determine its value, quality, or importance.

Epistaxis

Nosebleed; hemorrhage from the nose.

Nosebleed

The loss of blood from the tissue lining the nose, often due to dry air, injury, or nose picking.