Suppose a bank has $10,000 in deposits and $7000 in loans. What is its reserve ratio?
A) 3 percent
B) 7 percent
C) 30 percent
D) 70 percent

Name: Suppose a bank has $10,000 in deposits and $7000 in loans. What is its reserve ratio? A) 3 percent B) 7 percent C) 30 percent D) 70 percent
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Question

Quizplus · Accepted Answer

The reserve ratio is calculated as the ratio of reserves to deposits. Here, reserves equal deposits minus loans, which is $10,000 - $7,000 = $3,000. The reserve ratio is therefore $3,000 / $10,000 = 0.3 or 30 percent.

Suppose a Bank Has $10,000 in Deposits and $7000 in Loans