Assume That the Commercial Banking System Has Checkable Deposits of $10

Multiple Choice

Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the banking system then has

A) excess reserves of $2 billion.
B) neither an excess nor a deficiency of reserves.
C) a deficiency of reserves of $.5 billion.
D) excess reserves of only $.5 billion.