The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account.The bank must
A)increase reserves by $3,000.
B)increase reserves by $300.
C)decrease reserves by $3,000.
D)decrease reserves by $300.
E)not change its reserves until Charlie decides to withdraw her funds.

Question

Quizplus · Accepted Answer

When Charlie deposits $3,000, the bank is required to hold 10% of that as reserves, which is $300. Therefore, the bank must increase its reserves by $300.

The Required Reserve Ratio Is 10 Percent and Charlie Deposits