A reserve requirement of 20 percent means a bank must have at least $1,000 of reserves if its checkable deposits are
A) $100.
B) $1,000.
C) $5,000.
D) $12,000.

Question

Quizplus · Accepted Answer

The reserve requirement of 20 percent means that the bank must hold 20 percent of its checkable deposits in reserves. Therefore, for checkable deposits of $5,000, the bank would need to hold reserves of $1,000 (20% of $5,000).

A Reserve Requirement of 20 Percent Means a Bank Must