If the required reserve ratio is 4 percent, then $100 of reserves can support up to $2,500 of checkable deposits.

Name: If the required reserve ratio is 4 percent, then $100 of reserves can support up to $2,500 of checkable deposits.
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Question

Quizplus · Accepted Answer

This is true based on the formula for calculating the maximum amount of checkable deposits that can be supported by reserves, which is 1/required reserve ratio. So, 1/0.04 = 25. Then, $100 x 25 = $2,500.

If the Required Reserve Ratio Is 4 Percent, Then $100