Assume that the Federal Reserve sets the reserve requirement at 10%. If a bank has $100 million in deposits, then its required reserves must equal
A) $1 million.
B) $10 million.
C) $90 million.
D) $110 million.

Question

Quizplus · Accepted Answer

The required reserves are calculated by multiplying the bank's deposits by the reserve requirement percentage. In this case, 10% of $100 million is $10 million. Therefore, the bank's required reserves must equal $10 million.

Assume That the Federal Reserve Sets the Reserve Requirement at 10