Tazian Banking Statistics
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the Taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million Tazes of required reserves, 75 million Tazes of excess reserves, have issued 7,500 million Tazes of deposits, and hold 225 million Tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all currency is on deposit at the bank.
-Refer to Tazian Banking Statistics.Assume that banks desire to continue holding the same ratio of excess reserves to deposits.What is the required reserve ratio and the reserve ratio for Tazian Banks?
A)5%, 8%
B)4%, 8%
C)4%, 5%
D)None of the above is correct.

Question

Quizplus · Accepted Answer

To find the required reserve ratio, we divide the required reserves by the deposits:
Required reserve ratio = Required reserves / Deposits = 300 million Tazes / 7,500 million Tazes = 4%
To find the reserve ratio, we divide the sum of required reserves and excess reserves by the deposits:
Reserve ratio = (Required reserves + Excess reserves) / Deposits = (300 million Tazes + 75 million Tazes) / 7,500 million Tazes = 5%.
Therefore, the best choice is C) 4%, 5%.

Tazian Banking Statistics The Monetary Policy of Tazi Is Controlled by the Country's