Question

Jose deposits a $400 check in College Bank. The reserve requirement is 20%. Required reserves are $_____. Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices 80 320 400 480

Answer 1

80

Step-by-step explanation:

As for the required reserve balance the information is provided as follows:

Total amount deposited by Jose = $400

Provided the reserve balance = 20%

Therefore, reserve balance from this payment = $400
`*` 20% = $80.

As it is not specified clearly, that this $400 is inclusive or exclusive of the reserve balance, it is assumed that reserve will be created out of such balance.

Therefore, reserve maintained from this $400 = $80 and the rest $400 - $80 = $320 will be usable freely, without any restrictions.