If total deposits at Last Bank and Trust are $100 million, total loans are $70 million, and excess reserves are $20 million, then which of the following is the required reserve ratio?
A) 70 percent.
B) 30 percent.
C) 20 percent.
D) 10 percent.

Question

Quizplus · Accepted Answer

Required reserve ratio = (total reserves required/total deposits) x 100
Total reserves required = total deposits - excess reserves = $100 million - $20 million = $80 million
Required reserve ratio = (80/100) x 100 = 80%
Therefore, the required reserve ratio is 10%, which is the inverse of 80%.

If Total Deposits at Last Bank and Trust Are $100