Suppose a bank has $10,000 in deposits and $6000 in loans.What is its reserve ratio?
A) 3 percent
B) 7 percent
C) 40 percent
D) 70 percent

Question

Quizplus · Accepted Answer

The reserve ratio is calculated as reserves divided by deposits. If the bank has $10,000 in deposits and $6,000 in loans, it means it has $4,000 in reserves. Therefore, the reserve ratio is $4,000 / $10,000 = 0.4 or 40 percent.

Suppose a Bank Has $10,000 in Deposits and $6000 in Loans.What