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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

If checkable deposits are $20 million and the required reserve ratio is 15 percent, how much do required reserves equal?

To determine

The required reserve.

Explanation

The required reserves can be calculated using the following formula:

 Required reserves =r× Checkable deposits        (1)

Here, r is the required reserve ratio.

Since r is 15% and checkable deposit is $20 million, the required reserve can be calculated using Eqution-1 as follows:

 $10million =0

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