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25 November, 17:53

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

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  1. 25 November, 18:08
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    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.
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