Question

Moving to another question will save this response Question a Question 42 11 points A commercial bank has required reserves of $60 million and the reserve ratio is 20% How much are the commercial bank's checkable-deposit labes?

Answer 1

Answer 42

Formula :

Required reserve = Required reserve ratio*Checkable deposits,

Here Required reserve ratio = 20% = 0.20 and Required reserves = 60 million

=> 60 million = 0.20*Checkable deposits

=> Checkable deposits = (60 million)/0.2 = 300 million

Hence, Commercial Bank Checkable deposit liabilities = $300 million.