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28 June, 17:12

Suppose that a bank has accepted $20,000 in checking deposits, $40,000 in savings deposits, has $10,000 in cash reserves, and made $50,000 in loans. What is the bank's reserve ratio?

a) 10%

b) 16.6%

c) 20%

d) 25%

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Answers (1)
  1. 28 June, 19:37
    0
    16.67%

    Explanation:

    The computation of the bank reserve ratio is shown below:

    = Cash reserves : total deposits * 100

    where,

    Cash reserve is $10,000

    And, the total deposits would be

    = Checking deposits + saving deposits

    = $20,000 + $40,000

    = $60,000

    Now put these values to the above formula

    So, the ratio would equal to

    = $10,000 : $60,000 * 100

    = 16.67%
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