Respuesta :
The required reserve ratio is (100 / 500) * 100% = 20% when its total reserves are $100, and its demand deposits are $500.
How do you determine the reserve requirement?
You must compute the needed reserve ratio, which is the proportion of deposits that the bank must retain in reserve, in order to estimate the reserve requirement for the bank.
In this case, the total reserves of the bank are $100, and the demand deposits are $500, so the required reserve ratio is (100 / 500) * 100% = 20%.
This indicates that the bank is obligated to retain $100, or 20% of its total demand deposits, in reserve. The minimum amount of reserves that a bank must maintain is known as the reserve requirement and is set by the central bank or other regulatory body. The required reserve in this instance is $100, or the total amount of reserves held by the bank. As all of the bank's reserves are being spent to sustain its loans, this suggests that the bank is fully loaned up.
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