A bank has $500,000 in deposits and $475,000 in loans.It has loaned out all it can.It has a reserve ratio of

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The reserve ratio is the percentage of deposits that a bank must hold in reserve and cannot lend out. To calculate the reserve ratio, we divide the amount of reserves by the amount of deposits.

Reserves = (Total deposits) - (Loans) = $500,000 - $475,000 = $25,000

Reserve ratio = (Reserves/Deposits) x 100% = ($25,000/$500,000) x 100% = 5%

Therefore, the reserve ratio is 5 percent. This means that the bank is required to hold 5 percent of its deposits in reserve and cannot loan out that amount. Since the bank has already loaned out all it can, it implies that the bank is holding the required amount of reserves.

A Bank Has $500,000 in Deposits and $475,000 in Loans