Question

A bank has $8,000 in deposits and $6,000 in loans. it has loaned out all it can given the reserve requirement. it follows that the reserve requirement is

Answer 1

The reserve requirement, which is also referred to as the cash reserve ratio, is 25 percent. This is calculated by subtracting the $6,000 loaned out from the bank's $8,000 in deposits, yielding a reserve of $2,000. The reserve requirement is calculated by dividing $2,000 by $8,000.