Suppose a commercial bank's reserves increase by $3,000 and the bank,which holds no excess reserves,makes a loan of $2,400.What is the required reserve ratio?

Question

Quizplus · Accepted Answer

The required reserve ratio is calculated by dividing the reserves by the total deposits. Since the bank makes a loan of $2,400, the required reserves must be $600 ($3,000 - $2,400). Therefore, the required reserve ratio is $600/$3,000 = 0.20.

Suppose a Commercial Bank's Reserves Increase by $3,000 and the Bank,which