Question

If a bank has excess reserves of $10,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has actual reserves of:______

a. $16,000.
b. $20,000.
c. $26,000.
d. $36,000.

Answer 1

c. $26,000.

Step-by-step explanation:

The computation of the actual reserve is as follows:

Actual reserve is

= Reserve requirement + excess reserve

= $80,000 × 20% + $10,000

= $16,000 + $10,000

= $26,000

hence, the actual reserve is $26,000

Therefore the correct option is c.

We simply applied the above formula so that the correct value could come

And, the same is to be considered