Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 15 percent, then the bank will now have excess reserves of

A) $0

B) $2 million

C) $8 million

D) $10 million

Question

Business

Aaron

14 May, 06:27

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 15 percent, then the bank will now have excess reserves of

A) $0

B) $2 million

C) $8 million

D) $10 million

+4

Answers (1)

Know the Answer?

Kai Wilkinson · Answer 1

A) $0

Explanation:

with 100 million in checking account, and required reserve ratio in 10%

the bank need to hold 10 millions

IFthe Federal Reserve raises the required reserve ratio to 15% then it will need hold 15 millions

This bank has none excess reserves

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 15 percent, then the bank will now have excess reserves ofA) $0B) $2 millionC) $8 millionD) $10 million