Question

If a bank has a reserve ratio of 8 percent, then Group of answer choices the bank loans out at least 8 percent of its deposits. the bank’s ratio of loans to deposits is 8 percent. the bank keeps 8 percent of its deposits as reserves and loans out the rest. the bank charges an interest rate of 8 percent on all loans.

Answer 1

the bank keeps 8 percent of its deposits as reserves and loans out the rest.

Step-by-step explanation:

The reserve ratio is the percentage of reserves to its deposits and loans out the rest. It is required to control the mange withdrawal demand. Bank has to manage the enough reserves to pay the cash to customer when they demand.

This ratio is applicable by the State Bank. If State Bank wants to increase the supply of money, it decreases the reserve ratio.

Answer 2

the bank keeps 8 percent of its deposits as reserves and loans out the rest

Step-by-step explanation:

The purpose of these reserves is for banks to be able to meet customers cash withdrawal requests.

Reserve ratio is also one of the tools of monetary policy. If central bank wants to increase money supply, it reduces the reserve ratio and if it wants to reduce the money supply, it increases the reserve ratio.

I hope my answer helps you