Question

Suppose a bank has $400 million in deposits and $25 million in required reserves, and it is holding no excess reserves. What is the required reserve ratio?

Answer 1

the required reserve ratio is 6.25%

Step-by-step explanation:

The calculation of the required reserve ratio is given below:

Required reserve ratio is

= required reserves ÷ deposits

= $25 ÷ $400

= 0.0625

= 6.25%

Hence, the required reserve ratio is 6.25%

The same is to be relevant and considered too