Question

Vault cash is equal to $2 million, deposits by depository institutions at the central bank are $1 million, the monetary base is $15 million, and bank deposits are $30 million. Bank reserves are equal to:__________

a. $3 million.
b. $12 million.
c. $15 million.
d. $20 million.

Answer 1

a. $3 million.

Step-by-step explanation:

The computation of the bank reserves is shown below:

Bank reserves = vault cash + deposit by depositary institutions at central bank

= $2 million + $1 million

= $3 million

We simply added the two above items so that the correct amount could answer

hence, the option a is correct