Question

	If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a
	Selected Answer: c. $510 increase in excess reserves and a $90 increase in required reserves. Answers: a. $600 increase in required reserves and no increase in excess reserves.   b. $600 increase in excess reserves and no increase in required reserves.   c. $510 increase in excess reserves and a $90 increase in required reserves.

Answer 1

Ans: $510 increase in excess reserves and a $90 increase in required reserves.

Explanation:

Required Reserve = 15% of $600 = $90

Excess reserve = $600 - $90 = $510

Excess reserves are bank reserves in excess of a reserve requirement set by a central bank. They are reserves of cash more than the required amounts.