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The reserve requirement is 20%.Leroy receives $1000 as a graduation present and deposits the money in his chequing account.The bank does NOT want to hold excess reserves.
-(Scenario: Money Creation)Refer to Scenario: Money Creation.How much of the $1000 deposit is the bank required to keep in reserves?

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Quizplus · Accepted Answer

The reserve requirement is 20%, which means the bank is required to keep 20% of Leroy's $1000 deposit in reserves.

$1000 x 0.20 = $200

Therefore, the bank is required to keep $200 in reserves and can potentially lend out the remaining $800.

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