Table 16-6.
-Refer to Table 16-6. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?
A)5.00 percent
B)8.00 percent
C)8.42 percent
D)95.00 percent

Question

Table 16-6. 
-Refer to Table 16-6. If the Bank of Springfield has lent out all the money it can given its level of deposits, then what is the reserve requirement?
A)5.00 percent 
B)8.00 percent 
C)8.42 percent 
D)95.00 percent

Quizplus · Accepted Answer

To determine the reserve requirement, we need to calculate the total deposit amount in the Bank of Springfield. From the table, we can see that the Bank has $3,500,000 in deposits, and its total reserves amount to $280,000. We can set up the following equation to solve for the reserve requirement:
Reserve Requirement = Required Reserves / Deposits
Required Reserves = Deposits * Reserve Requirement
$280,000 = $3,500,000 * Reserve Requirement
Reserve Requirement = $280,000 / $3,500,000
Reserve Requirement = 0.08 or 8.00 percent
Therefore, the correct choice is B.

Table 16-6. -Refer to Table 16-6. If the Bank of Springfield Has