A reserve requirement of 20 percent means a bank must have $1,000 of reserves if its checkable deposits are:
A) $100.
B) $1,000.
C) $5,000.
D) $12,000.

Question

Quizplus · Accepted Answer

If a bank has checkable deposits of $5,000, a reserve requirement of 20% means it must hold $1,000 in reserves (20% of $5,000). Therefore, the correct choice is C. The other choices have checkable deposits that are too low or too high to meet the reserve requirement.

A Reserve Requirement of 20 Percent Means a Bank Must