In Wellville,the money supply is $80,000 and reserves are $18,000.Assuming that people hold only deposits and no currency,and that banks hold only required reserves,the required reserve ratio is

Question

Quizplus · Accepted Answer

The required reserve ratio can be found by dividing reserves by deposits: 
required reserve ratio = reserves / deposits 
= $18,000 / $80,000 
= 0.225 or 22.5%

In Wellville,the Money Supply Is $80,000 and Reserves Are $18,000