Question

Suppose a bank has $500 million in deposits and $35 million in required reserves, and it is holding no excess reserves. What is the required reserve ratio

Answer 1

The required reserve ratio is $17500 million.

Step-by-step explanation:

The given deposit with the banks = $500 million

Required reserves = $35 million

We already have the deposits with the bank and the required reserves. Now we have to calculate the required reserve ratio and it can be calculated by multiplying the bank deposit with required reserves.

Required reserve ratio = Bank deposits × Required reserve

= 500 × 35

= $17500 million