Suppose there is an increase in excess reserves of $10 million and the banking system's chequable deposits increase by a maximum of $200 million.What is the desired reserve ratio?

Question

Quizplus · Accepted Answer

The desired reserve ratio is calculated by dividing the increase in excess reserves by the maximum increase in chequable deposits, then multiplying by 100 to get a percentage. Here, $10 million / $200 million = 0.05, or 5 percent.

Suppose There Is an Increase in Excess Reserves of $10