A chartered bank has desired reserve of $6000 and the reserve ratio is 20 percent.What are the chartered bank's demand-deposit liabilities?
A)$1,200
B)$9,000
C)$30,000
D)$120,000

Question

Quizplus · Accepted Answer

The reserve ratio is 20%, meaning the bank must hold 20% of its demand-deposit liabilities as reserves. If the desired reserve is $6000, then $6000 is 20% of the demand-deposit liabilities. Therefore, the demand-deposit liabilities are $6000 / 0.20 = $30,000.

A Chartered Bank Has Desired Reserve of $6000 and the Reserve