Suppose the First National Bank acquires $500,000 in new deposits and the desired reserve ratio is 12 percent.What are the desired reserves of this bank?

Question

Quizplus · Accepted Answer

The desired reserve ratio is 12 percent, which means that the bank must hold 12 percent of its deposits in reserves. Therefore, the desired reserves can be calculated by multiplying the new deposits by the reserve ratio:

Desired reserves = $500,000 x 0.12 = $60,000

So the correct answer is B) $60,000.

Suppose the First National Bank Acquires $500,000 in New Deposits