Exhibit 19-2 Balance Sheet of Springfield National Bank

-In Exhibit 19-2,if Springfield National's customers write checks for $200 and the required reserve ratio is 20 percent,then its required reserves fall to:

Question

Exhibit 19-2 Balance Sheet of Springfield National Bank
 
-In Exhibit 19-2,if Springfield National's customers write checks for $200 and the required reserve ratio is 20 percent,then its required reserves fall to:

Quizplus · Accepted Answer

The required reserve ratio is 20 percent, so for every $200 deposited, the bank is required to hold $40 in reserves. If customers write checks for $200, this decreases the bank's demand deposits by $200, and therefore its required reserves also decrease by 20% of $200, or $40. Therefore, the bank's required reserves fall to $160.