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Excess Reserves: Definition & Formula

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Excess reserves are __________~.

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1. What numbers do you need to determine the level of a bank's excess reserves?

2. Which of the following is the best explanation of fractional reserve banking?

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About This Quiz & Worksheet

Excess reserves are an important factor of the U.S. banking system, and this quiz/worksheet will help you test your understanding of them as well as related banking concepts.

Quiz & Worksheet Goals

In these assessments you'll be tested on:

  • Definition of excess reserves
  • Negative number of excess reserves
  • Characteristics of fractional reserve banking
  • Determining the level of a bank's excess reserves

Skills Practiced

This quiz and worksheet allow students to test the following skills:

  • Defining key concepts - ensure that you can accurately describe important terms, such as excess reserves and fractional reserve banking
  • Information recall - access the knowledge you've gained regarding the numbers needed to determine excess reserves and the significance of a calculation of excess reserves resulting in a negative number
  • Problem solving - use acquired knowledge to solve a practice problem involving the calculation of excess reserves

Additional Learning

To learn more about bank reserves, review the accompanying lesson called Excess Reserves: Definition & Formula. This lesson covers the following objectives:

  • Understand the United States' fractional reserve banking system
  • Define required, legal, primary, and secondary reserves
  • Know the formula used to calculate a bank's excess reserves
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