If, from reserves of $5000, the banking system can expand the money supply by a maximum of $25 000, then the reserve ratio is:

Name: If, from reserves of $5000, the banking system can expand the money supply by a maximum of $25 000, then the reserve ratio is:
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Quizplus · Accepted Answer

The reserve ratio is calculated as the reserves divided by the total money supply. Here, $5000 in reserves allows for a $25000 money supply, so the reserve ratio is $5000/$25000 = 0.20 or 20 percent.

If, from Reserves of $5000, the Banking System Can Expand