Question

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million in loans. Given this information you find that the reserve requirement must be a. 11 percent. b. 8 percent. c. 9.5 percent. d. 1.7 percent.

Answer 1

8 percent

Step-by-step explanation:

The manager of a bank states that your bank has $6 million in excess reserves

$400 million in deposits and $362 million in loans

Therefore the reserve requirement can be calculated as follows

$400,000,000 - $362,000,000

= $38,000,000

$38,000,000 - $6,000,000

= $32,000,000

= $32,000,000/$400,000,000

= 0.08× 100

= 8 percent