A bank's required reserves can be calculated by
A) dividing its excess reserves by its required reserves.
B) dividing its required reserves by its excess reserves.
C) multiplying its checkable-deposit liabilities by the reserve ratio.
D) multiplying its checkable-deposit liabilities by its excess reserves.

Question

Quizplus · Accepted Answer

Required reserves are calculated by multiplying a bank's checkable-deposit liabilities by the reserve ratio set by the Federal Reserve. Therefore, choice C is the correct answer.

A Bank's Required Reserves Can Be Calculated by