(18)Suppose the banking system has $50 billion in deposit liabilities and holds
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(18)Suppose the banking system has $50 billion in deposit liabilities and holds $5 billion in cash reserves. The desired minimum reserve ratio is 8%. Given their deposit liabilities, the banking system desires to hold cash reserves amounting to Select one: a. $5 billion. b. $4 billion. c. $8 billion. d. $15 billion. (18)Suppose the banking system has $50 billion in deposit liabilities and holds $5 billion in cash reserves. The desired minimum reserve ratio is 8%. Given their deposit liabilities, the banking system desires to hold cash reserves amounting to Select one: a. $5 billion. b. $4 billion. c. $8 billion. d. $15 billion. Select one: a. $5 billion. b. $4 billion. c. $8 billion. d. $15 billion.Explanation / Answer
Answer : Option B is correct.
If the deposits liability = $50 billion
Reserve ratio = 8%
Cash reserve amounting = $50billion * 0.08 = $4 billion
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