The Manager of the Bank Where You Work Tells You

Multiple Choice

The manager of the bank where you work tells you that the bank has $400 million in deposits and $340 million dollars in loans. The Fed then raises the reserve requirement from 10 percent to 15 percent. Assuming everything else stays the same, how much is the bank holding in excess reserves after the increase in the reserve requirement?

A) $0
B) $20 million
C) $40 million
D) $60 million