Question

Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. Assets Liabilities and Net Worth (Billions of Dollars) Total reserves 5 Checkable deposits 50 Loans 25 Securities 20 Total 50 Total 50 What is the required reserve ratio

Answer 1

Answer:

10 percent

Explanation:

Given that,

Total reserves = $5 billion

Check-able deposits = $50 billion

Loans = $25 billion

Securities = $20 billion

Required reserve ratio = (Reserves ÷ Check-able deposits) × 100

                                      = ($5 ÷ $50) × 100

                                      = 10%

Therefore, the required reserve ratio is 10 percent.