If a bank has a total of $80,000 in deposits and has made three loans in the amounts of $10,000, $20,000, and $30,000, what is this bank's reserve ratio (assuming it has no other deposits or made any other loans)?
A) 20%
B) 25%
C) 60%
D) 75%

Question

Quizplus · Accepted Answer

The reserve ratio is calculated as the reserves divided by total deposits. The bank has $80,000 in deposits and has loaned out $60,000 ($10,000 + $20,000 + $30,000), leaving $20,000 in reserves. The reserve ratio is $20,000 / $80,000 = 25%.

If a Bank Has a Total of $80,000 in Deposits