The ABC Commercial Bank has $5,000 in excess reserves, and the reserve ratio is 25 percent. This information is consistent with the bank having A) $90,000 in checkable deposit liabilities and $32,000 in reserves. B) $90,000 in checkable deposit liabilities and $22,500 in reserves. C) $20,000 in checkable deposit liabilities and $10,000 in reserves. D) $90,000 in outstanding loans and $22,500 in reserves.

Given, Excess reserve = $5000 Reserve ratio (RR) = 25%

Answered: The ABC Commercial Bank has $5,000 in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The ABC Commercial Bank has $5,000 in excess reserves, and the reserve ratio is 25 percent. This information is consistent with the bank having

A)	$90,000 in checkable deposit liabilities and $32,000 in reserves.

B)	$90,000 in checkable deposit liabilities and $22,500 in reserves.

C)	$20,000 in checkable deposit liabilities and $10,000 in reserves.

D)	$90,000 in outstanding loans and $22,500 in reserves.

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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