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21 February, 01:26

Working through an open-market operation Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. Assets Liabilities and Net Worth (Billions of Dollars) Total reserves 5 Checkable deposits 50 Loans 25 Securities 20 Total 50 Total 50.

What is the required reserve ratio?

A. 25%

B. 40%

C. 5%

D. 10%

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  1. 21 February, 04:25
    0
    10%

    Explanation:

    Open market operations is a measure used by central bank to expand or contract money supply in the banking system and influence interest rate by selling securities to bank or buying from bank.

    Required reserve ratio = total reserve / total checkable deposit * 100

    required reserve ratio = 5 / 50 * 100 = 10%
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