If loans are $69,000, excess reserves are $1,400, and checkable deposits are $80,000, then the required reserve ratio must be:
A) 1.75 percent.
B) 12 percent.
C) 13.75 percent.
D) 17.5 percent.
E) 0.12 percent.

Question

Quizplus · Accepted Answer

Required Reserves = Checkable Deposits x Required Reserve Ratio
$80,000 x Required Reserve Ratio = $69,000 + $1,400
$80,000 x Required Reserve Ratio = $70,400
Required Reserve Ratio = $70,400 / $80,000
Required Reserve Ratio = 0.88 or 88%
Since the question is asking for the required reserve ratio as a percentage, we need to convert 0.88 to a percentage by multiplying it by 100. So the required reserve ratio is 88%, which is equivalent to 12%.

If Loans Are $69,000, Excess Reserves Are $1,400, and Checkable