A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank feels more comfortable with maintaining a 30% reserve,what amount of deposits does the bank currently have?
A) $1,500,000
B) $600,000
C) $1,000,000
D) $300,000
E) None of the above.

Question

Quizplus · Accepted Answer

The bank maintains a 30% reserve, so $300,000 is 30% of the deposits. Therefore, the total deposits are $300,000 / 0.30 = $1,000,000.

A Small State Bank Currently Has Reserves Equal to $300,000