Assume a bank has total deposits of $100,000 and $20,000 is set aside to meet reserve requirements of the Fed. Its required reserve ratio is:
A) $20,000.
B) 20 percent.
C) 0.2 percent.
D) 1 percent.

Question

Quizplus · Accepted Answer

The required reserve ratio is the percentage of deposits that a bank must hold in reserve. In this case, $20,000 of the $100,000 deposits is held in reserve, which is 20 percent ($20,000/$100,000). Therefore, the required reserve ratio is 20 percent.

Assume a Bank Has Total Deposits of $100,000 and $20,000