A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the reserve...
Question:
A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the reserve requirement is 20 percent. If the reserve requirement is lowered to 10 percent, the bank's excess reserves will be:
A) $1,000.
B) $8,000.
C) $9,000.
D) $17,000.
Banks:
The central bank of the country regulates commercial banks. The central bank frequently issues various guidelines and circulars for the banks. Guidelines for required reserves are one such guideline.
Answer and Explanation: 1
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View this answerThe correct option is (C) $9,000.
Given that -
Reserve Requirement = 20%
Deposit Liabilities = $80,000
Excess Reserves = $1,000
{eq}\text{Requi...
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