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If checkable deposits in Bank A total $100 million and the required reserve ratio is 12%, then required reserves at Bank A equalGroup of answer choices$88.0 million$12.0 million$8.8 million$1.2 million

Question

If checkable deposits in Bank A total 100millionandtherequiredreserveratiois12100 million and the required reserve ratio is 12%, then required reserves at Bank A equalGroup of answer choices88.0 million12.0million12.0 million8.8 million$1.2 million

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Solution

The required reserves of a bank is calculated by multiplying the total deposits by the required reserve ratio.

Here's how you can calculate it:

Step 1: Convert the required reserve ratio from a percentage to a decimal. In this case, 12% becomes 0.12.

Step 2: Multiply the total deposits by the required reserve ratio. In this case, 100million0.12=100 million * 0.12 = 12 million.

So, the required reserves at Bank A equal $12 million.

This problem has been solved

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