Bank deposits at the federal reserve = $40 billion, vault cash = $2 billion, the required reserve ratio = 0.10, and total checkable deposits = $400 billion. it follows that required reserves equal billion, (total) reserves equal billion and excess reserves equal billion. a. $38; $40; $2b. $2; $40; $38c. $42; $40; $2d. $42; $42; $2e. $40; $42; $2

the correct option is E. $40; $42; $2

Explanation:

The following information is given in the question which is needed to solve the question is shown below:

1. Bank deposits at Federal reserve are $40 billion

2. Vault cash is $2 billion which means it is needed to meet day to day expenses.

So, the required reserve is $40 million which is mentioned in the question

The total reserve is equaled to

= Bank deposits + vault cash

= $40 billion + $2 billion

= $42 billion

And, the excess reserve equals to

= Total reserve - bank deposits

= $42 billion - $40 billion

= $2 billion

The other things like checkable deposits and the required reserve ratio is irrelevant. Therefore, it is ignored.

Hence, the  required reserves are $40 billion, (total) reserves are $42 billion and excess reserves are $2 billion.

Thus, the correct option is E. $40; $42; $2

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