Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10 percent. If the bank’s required and excess reserves are equal, then its actual reserves:

A.  are $20,000.
B.  are $10,000.
C.  are $1,000,000.
D.  cannot be determined from the given information.

ANSWER:

A.  are $20,000.