HomeQuestionsEconomicsCommercial Bank Reserves
📚 Learning Guide
Commercial Bank Reserves
easy

If a bank is required to maintain a reserve ratio of 12% and it has total deposits of $2 million, how much must it hold in reserve?

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose AnswerChoose the Best Answer

A

$240,000

B

$180,000

C

$120,000

D

$300,000

Understanding the Answer

Let's break down why this is correct

The reserve ratio tells how much of the deposits the bank must keep as reserves. Other options are incorrect because It mixes the ratio with a different percentage; This uses the wrong percentage.

Key Concepts

Reserve Requirements
Topic

Commercial Bank Reserves

Difficulty

easy level question

Cognitive Level

understand

Deep Dive: Commercial Bank Reserves

Master the fundamentals

Definition
Definition

Commercial Bank Reserves involves understanding how banks manage their reserves, including required reserves and excess reserves. This topic is crucial in determining a bank's capacity to lend and its adherence to reserve requirements set by regulatory authorities.

Topic Definition

Commercial Bank Reserves involves understanding how banks manage their reserves, including required reserves and excess reserves. This topic is crucial in determining a bank's capacity to lend and its adherence to reserve requirements set by regulatory authorities.

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.

Start Learning with SeekhExplore More Commercial Bank Reserves Questions