Question

Page 577 17.2. How do banks create money? Consider this hypothetical balance sheet for YooHoo Bank, in the fictional country of Hellond. YooHoo Bank Assets (in thousands of U.S. dollars) Liabilities and owner's equity (in thousands of U.S. dollars) Government securities $1,700 Checking deposits $10,000 Required reserves $800 Owner's equity $1,500 Excess reserves $100 Loans $8,900 Total assets $11,500 Liabilities and net worth $11,500 Calculate YooHoo Bank’s required reserve ratio, as a percentage. Round to the nearest percent if necessary. Type an answer and press enter to submit%

Answer 1

Answer:

8%

Explanation:

Following is the require reserve ratio:

Required reserve ratio = Reserves/ Deposits

Required reserve ratio = $800/$10,000 * 100

Required reserve ratio = 0.08 * 100

Required reserve ratio = 8%

So, the required reserve ratio for YooHoo Bank’s is 8%.