If a bank's reserve ratio is 10 per cent and it is just meeting that requirement when $10,000 in cash is withdrawn, it must now:

Question

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When $10,000 is withdrawn, the bank's reserves decrease by $10,000. To maintain a 10% reserve ratio, the bank must have reserves equal to 10% of its deposits. Therefore, it needs to increase its reserves by $9,000 to meet the reserve requirement after the withdrawal.

If a Bank's Reserve Ratio Is 10 Per Cent and It