URGENT:B low is the T-account for First City Bank, the only bank in a small city-state.?

Question

elow is the T-account for First City Bank, the only bank in a small city-state. In addition to the demand deposits of $500,000, citizens hold $200,000 in coins and currency. Assume that demand deposits and currency are the only forms of money. Use this information to answer the following questions.

Assets Liabilities

Reserves $100,000 Deposits $500,000

Loans $400,000

8.2. Assume that the bank has adequate reserves to satisfy a reserve requirement imposed by the government, but it does not hold excess reserves. What is the reserve requirement?

%

Please enter a whole number, with no decimal point.

Answer 1

100'000/500'000=0.2=20%

Answer: Reserve requirement is 20%.