Question

Deposits in all financial institutions equal $2 trillion. The total reserves held by these institutions are $240 billion, $100 billion of which is in excess of reserve requirements.
a. What is the percentage reserve requirement?

Answer 1

if $240 billion is $100 billion in excess of reserve requirements, reserve requirements must be $240 billion - $100 billion = $140 billion.

percentage reserve requirement = \(\frac{\text{reserve requirement}}{\text{total deposits}}\)