Answer:
The correct answer is option B.
Explanation:
The required reserve ratio is 5 percent.
A commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the Fed, and $60 million in checkable deposits.
The required reserves
= [tex]Required\ reserve\ ratio\ \times\ checkable\ deposits[/tex]
= [tex]0.05\ \times\ \$60 million[/tex]
= 3 million
The total reserves are the amount in the vault and the deposits at the fed. So, the total reserves are $5 million.
The excess reserves are
= $5 million - $3 million
= $2 million
