Table 10-2

-Refer to the Table 10-2.If the Last Bank of Cedar Bend is holding $5000 in excess reserves,what is the reserve requirement?
A)1/7
B)1/8
C)1/9
D)1/10

Question

Table 10-2
 
-Refer to the Table 10-2.If the Last Bank of Cedar Bend is holding $5000 in excess reserves,what is the reserve requirement?
A)1/7 
B)1/8 
C)1/9 
D)1/10

Quizplus · Accepted Answer

The reserve requirement is calculated as a percentage of deposits. In this case, the total deposits are $45,000 and the required reserves are $5,000. Therefore, the reserve requirement can be calculated as:

RR/Deposits = Excess Reserves/Required Reserves

RR/45,000 = 5000/40,000

RR = (5000/40,000) x 45,000

RR = 1/9

Therefore, the reserve requirement is 1/9 or 11.11%.

Table 10-2 -Refer to the Table 10-2.If the Last Bank of Cedar