Suppose a bank's reserve ratio is 5 percent and the bank has $1,000 in deposits.Its reserves amount to

Name: Suppose a bank's reserve ratio is 5 percent and the bank has $1,000 in deposits.Its reserves amount to
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The reserve ratio is the percentage of deposits that banks must hold in reserve, meaning they cannot lend or invest this portion of the deposits. In this case, the reserve ratio is 5% or 0.05, so the bank must hold 0.05 x $1,000 = $50 in reserves. Therefore, the best answer is B) $50.

Suppose a Bank's Reserve Ratio Is 5 Percent and the Bank