Which of the following statements is correct?
A)required reserves = (total deposits)× (excess reserve ratio)
B)required reserves = (total reserves)× (excess reserve ratio)
C)required reserves = (total deposits)× (required reserve ratio)
D)required reserves = (total deposits)÷ (required reserve ratio)
E)required reserves = (total deposits)× (required reserve ratio)- excess reserves

Question

Quizplus · Accepted Answer

The correct formula for required reserves is: required reserves = (total deposits) × (required reserve ratio). This formula calculates the minimum amount of reserves a bank must hold based on the deposits it has. The excess reserve ratio refers to the percentage of deposits a bank holds in excess of required reserves, and is not used in the calculation of required reserves.

Which of the Following Statements Is Correct