Springfield National Bank holds $200 million in deposits from their customers. If the Fed sets the reserve requirement at 12 percent, Springfield must hold $24 million in cash at the bank or in non-interest-bearing deposits at the local Federal Reserve district bank.

Question

Quizplus · Accepted Answer

The reserve requirement can be calculated by multiplying the deposits by the reserve ratio. In this case, 12% of $200 million equals $24 million, which Springfield National Bank must hold in reserve.

Springfield National Bank Holds $200 Million in Deposits from Their