The table given below records the amount of new deposits, the value of required reserves, and total amount loaned out by Banks 1, 2, and 3.
Table 12.3
$\begin{array}{l}
\begin{array}{|c|c|c|c|}
\hline \text { Bank } & \text { New Deposit } & \begin{array}{c}
\text { Required } \
\text { Reserves }
\end{array} & \text { Loans } \
\hline \text { Bank 1 } & \$ 10,000 & \$ 1,000 & \$ 9,000 \
\hline \text { Bank 2 } & \$ 9,000 & \$ 900 & \$ 8,100 \
\hline \text { Bank 3 } & \$ 8,100 & \$ 810 & \$ 7,290 \
\hline
\end{array}\
\text { *Assume all excess reserves are loaned out. }
\end{array}$
-Refer to Table 12.3. What is the reserve requirement?

Question

The table given below records the amount of new deposits, the value of required reserves, and total amount loaned out by Banks 1, 2, and 3.
Table 12.3
 $\begin{array}{l}
\begin{array}{|c|c|c|c|}
\hline \text { Bank } & \text { New Deposit } & \begin{array}{c}
\text { Required } \
\text { Reserves }
\end{array} & \text { Loans } \
\hline \text { Bank 1 } & \$ 10,000 & \$ 1,000 & \$ 9,000 \
\hline \text { Bank 2 } & \$ 9,000 & \$ 900 & \$ 8,100 \
\hline \text { Bank 3 } & \$ 8,100 & \$ 810 & \$ 7,290 \
\hline
\end{array}\
\text { *Assume all excess reserves are loaned out. }
\end{array}$
-Refer to Table 12.3. What is the reserve requirement?

Quizplus · Accepted Answer

The reserve requirement is the percentage of deposits that banks are required to hold in reserve. In this case, the value of required reserves for each bank is given along with the new deposits and loans made. Based on the values given, we can calculate the reserve requirement as:

Reserve Requirement = (Value of Required Reserves / New Deposits) x 100%

For Bank 1, Reserve Requirement = (1000/10000) x 100% = 10%
For Bank 2, Reserve Requirement = (900/9000) x 100% = 10%
For Bank 3, Reserve Requirement = (810/8100) x 100% = 10%

Therefore, the reserve requirement for all three banks is 10 percent.

The Table Given Below Records the Amount of New Deposits