Question

Bank ABC has checkable deposits of $415 million and total reserves of $50 million. The required reserve ratio is 9 percent. The bank has excess reserves of Group of answer choices $14,550,000. $12,650,000. $365,000,000. There is not enough information provided to answer this question. $45,500,000.

Answer 1

Answer:

$12,650,000.

Explanation:

Reserves is the total amount of a bank's deposit that is not given out as loans

Reserves = Deposits - outstanding loans

Required reserves is the percentage of deposits required of banks to keep as reserves by the central bank

Required reserves = reserve requirement x deposits

0.09 x 415 million = 37.35 million

Excess reserves is the difference between reserves and required reserves

50 million - 37.35 million = 12.65 million