Suppose a bank has $200,000 in deposits and $150,000 in loans. What is its reserve ratio?
A) 1 percent
B) 5 percent
C) 10 percent
D) 25 percent

Question

Quizplus · Accepted Answer

The reserve ratio is calculated by dividing the bank's reserves by its total deposits. In this case, the bank's reserves are $200,000 (deposits) - $150,000 (loans) = $50,000. Therefore, the reserve ratio is $50,000 / $200,000 = 0.25 or 25%.

Suppose a Bank Has $200,000 in Deposits and $150,000 in Loans