Suppose the required reserve ratio is 10% and a commercial bank has $2 million in checkable deposits appearing on the liability side of its balance sheet.How much vault cash does the bank have?

Question

Quizplus · Accepted Answer

The amount of vault cash a bank has cannot be determined solely from the required reserve ratio and the amount of checkable deposits. The required reserve ratio tells us the percentage of deposits that must be held as reserves, but it does not specify how those reserves are held (e.g., as vault cash or as deposits with the central bank).

Suppose the Required Reserve Ratio Is 10% and a Commercial