If the required reserve ratio is 0.2,and a bank has $100 million in demand deposits and $40 million in property and buildings,it must hold reserves of at least

Question

Quizplus · Accepted Answer

The bank has $100 million in demand deposits, therefore it must hold at least 0.2*$100 million = $20 million in reserves. The $40 million in property and buildings is irrelevant to the calculation of required reserves. Therefore, the answer is $20 million.

If the Required Reserve Ratio Is 0