Exhibit 15-1

-Refer to Exhibit 15-1. If Eubank is holding no excess reserves, what must the required reserve ratio be?

Question

Exhibit 15-1
 
-Refer to Exhibit 15-1. If Eubank is holding no excess reserves, what must the required reserve ratio be?

Quizplus · Accepted Answer

The required reserve ratio refers to the percentage of deposits that banks are required to hold in reserves. In this scenario, if Eubank is holding no excess reserves, it means that all of their deposits are being held in reserve. Therefore, the required reserve ratio must be equal to 100 percent minus the excess reserves, which in this case is 0 percent. Solving for the required reserve ratio: 100% - 0% = 100%, which can be expressed as 1.0 as a decimal. Dividing the total deposits of $100,000 by the required reserve ratio of 1.0 gives us the amount of required reserves that Eubank must hold, which is equal to $100,000. The question asks for the required reserve ratio as a percentage, so we need to express this required reserve amount as a percentage of the total deposits: ($100,000 / $1,000,000) x 100% = 10%. Thus, the answer is (C) 10 percent.

Exhibit 15-1 -Refer to Exhibit 15-1. If Eubank Is Holding No Excess