If a bank has $100,000 in checkable deposits, reserves of $20,000, and no excess reserves, then the required reserve ratio is:
A) 10 percent.
B) 20 percent.
C) 25 percent.
D) 30 percent.
E) 50 percent.

Question

Quizplus · Accepted Answer

The required reserve ratio is calculated by dividing the reserves by the checkable deposits. Here, $20,000 (reserves) / $100,000 (checkable deposits) = 0.20 or 20 percent.

If a Bank Has $100,000 in Checkable Deposits, Reserves of $20,000