If actual reserves in the banking system are $8,000, checkable deposits are $70,000, and the legal reserve ratio is 10 percent, then excess reserves are
A) zero.
B) $1,000.
C) $2,000.
D) $500.

Question

Quizplus · Accepted Answer

The required reserves can be calculated as (checkable deposits) x (legal reserve ratio) = $70,000 x 0.1 = $7,000. 
Excess reserves can be calculated as (actual reserves) - (required reserves) = $8,000 - $7,000 = $1,000. 
Therefore, the correct answer is B, $1,000.

If Actual Reserves in the Banking System Are $8,000, Checkable