Meditorian Banking Statistics
The monetary policy of Meditor is determined by the Meditorian Central Bank. The local currency is the medit. Meditorian banks collectively hold 100 million medits of required reserves, 25 million medits of excess reserves, 250 million medits of Meditorian Treasury Bonds, and their customers hold 1,000 million medits of deposits. Meditorians prefer to use only demand deposits and so all currency is on deposit at the bank.
-Refer to Meditorian Central Banking.Assume that banks desire to continue holding the same ratio of excess reserves to deposits.What is the required reserve ratio and what is the reserve ratio?
A)2%, 8%
B)8%, 10%
C)10%, 12.5%
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The required reserve ratio is calculated as required reserves divided by deposits (100 million / 1,000 million = 10%). The reserve ratio is the sum of required and excess reserves divided by deposits ((100 million + 25 million) / 1,000 million = 12.5%).

Meditorian Banking Statistics The Monetary Policy of Meditor Is Determined by the Meditorian