A bank's required reserves are calculated by multiplying .
A) the sum of its deposits and cash in its vault by the reserve ratio
B) the gold in its vault by the reserve ratio
C) its deposits by the required reserve ratio
D) cash in its vault by the required reserve ratio

Question

Quizplus · Accepted Answer

Required reserves for a bank are calculated by multiplying the bank's deposits by the required reserve ratio. This is because the required reserve ratio is the percentage of deposits that banks are required to hold in reserve as currency or on deposit with their local Federal Reserve Bank.

A Bank's Required Reserves Are Calculated by Multiplying