Question

Suppose your grandma sends you $100 for your birthday and you deposit $100 into your checking account at the local bank. The reserve ratio is 10%. Based upon this deposit, the bank's reserves have increased by _____ and the bank's checkable deposits have increased by _____. a $100; $90 b $10; $100 c $100; $100 d $110; $100 e $90; $100

Answer 1

Answer:

e. $90; $100

Explanation:

Answer 2

Answer:

e. $90; $100

Explanation:

The reserve ratio also known as cash reserve ratio is the portion of deposit that commercial banks must hold onto, rather than lend out or invest. It is determined by the central bank of a country and it varies.

Deposit into local bank=$100

Reserve ratio=10%

reserve ratio=10% of $100

=10/100×$100

=0.1×$100

=$10

Bank reserve has increased by $100 - $10

=$90

Checkable deposit has increased by $100 dollars deposited.