Suppose the desired reserve ratio is 10 per cent.If Urban Bank has total deposits of $1,000 and total assets of $10,000,the amount of desired reserves is
A)$1,000.
B)$100.
C)$900.
D)$1,100.
E)$9,000.

Question

Quizplus · Accepted Answer

The desired reserve ratio is 10%, which means that the bank needs to hold 10% of its deposits as reserves. Therefore, the desired reserves would be ($1,000 x 10%) = $100.

Suppose the Desired Reserve Ratio Is 10 Per Cent