Suppose that a bank receives $100 in deposits and the maximum it can lend from that is $80. In this case, the reserve requirement for the bank is _____ percent.

Question

Quizplus · Accepted Answer

The reserve requirement is the percentage of deposits a bank must hold in reserve and not lend out. If the bank can lend out $80 from a $100 deposit, it must hold $20 as reserves. Therefore, the reserve requirement is $20/$100 = 20%.

Suppose That a Bank Receives $100 in Deposits and the Maximum