Question

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million in loans. Given this information you find that the reserve requirement must be

Answer 1

Answer and Explanation:

The computation of the reserve requirement is given below;

Required reserves is

= Deposits - loans - excess reserves

= $400 - $362 - $6

= 32 million

And,

Required reserve ratio is

= Required reserves ÷ Deposits

= 32 ÷ 400

= 8%

In this way, it should be determined so that the correct value & percentage could come