If your bank receives a checkable deposit of $20,000, and the banking system makes loans totaling $180,000, the maximum possible, then the required reserve ratio must be:
A) 0.10.
B) 0.20.
C) 0.25.
D) 0.40.
E) 0.50.

Question

Quizplus · Accepted Answer

The required reserve ratio is the fraction of deposits that a bank must hold as reserves. If the banking system can make loans totaling $180,000 from a $20,000 deposit, the reserve ratio is 1 - (20,000/200,000) = 0.10.

If Your Bank Receives a Checkable Deposit of $20,000, and the Banking