Consider the following data about the economy: currency outstanding (C)= $1 trillion, total deposits (D)= $750 billion, total reserves (R)= $76 billion, and the required reserve ratio (RR ratio)= 10%. What is the level of excess reserves for this economy?

Question

Quizplus · Accepted Answer

Excess reserves are calculated as actual reserves minus required reserves. Required reserves for the deposits are 10% of $750 billion = $75 billion. Actual reserves are $76 billion. Therefore, excess reserves = $76 billion - $75 billion = $1 billion.

Consider the Following Data About the Economy: Currency Outstanding (C)=