Use the balance sheet for the following questions.
Table 29-3

-Refer to Table 29-3. If the Last Bank of Cedar Bend is holding $5000 in excess reserves, what is the reserve requirement?
A)1/7
B)1/8
C)1/9
D)1/10

Question

Use the balance sheet for the following questions.
Table 29-3
 
-Refer to Table 29-3. If the Last Bank of Cedar Bend is holding $5000 in excess reserves, what is the reserve requirement?
A)1/7 
B)1/8 
C)1/9 
D)1/10

Quizplus · Accepted Answer

The reserve requirement can be calculated using the formula: Excess Reserves = Total Reserves - Required Reserves. If the bank is holding $5000 in excess reserves, it implies that the reserve requirement is 1/9, as this would allow the bank to hold excess reserves while meeting the required reserves.

Use the Balance Sheet for the Following Questions