assume the legal reserve ratio is 25 percent and the fourth national bank borrows $10,000 from the federal reserve bank in its district. as a result: group of answer choices commercial bank reserves are increased by $7,500. the supply of money is automatically increased by $10,000. the supply of money automatically declines by $7,500. commercial bank reserves are increased by $10,000.

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15-12-2022
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assume the legal reserve ratio is 25 percent and the fourth national bank borrows $10,000 from the federal reserve bank in its district. as a result: group of answer choices commercial bank reserves are increased by $7,500. the supply of money is automatically increased by $10,000. the supply of money automatically declines by $7,500. commercial bank reserves are increased by $10,000.

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topeadeniran2 topeadeniran2 · Answer 1 · 2022-12-19T18:22:37+01:00

Assume the legal reserve ratio is 25 percent and the Fourth National Bank borrows $10,000 from the Federal Reserve Bank in its district. As a result: commercial bank reserves are increased by $10,000. The correct option is D.

What is a reserve ratio?

The amount of reservable liabilities that commercial banks must hold onto rather than lend out or invest is known as the reserve ratio. The central bank of the nation, in this case the Federal Reserve in the United States, sets this requirement. It is also referred to as the ratio of cash reserves.

The central bank sets the legal reserve ratio. There are two parts to the legal reserve ratio: Cash Reserve Ratio (CRR): This term refers to the proportion of commercial banks' cash reserves held by the central bank to their total deposits.

In this case, the commercial bank reserves are increased by $10,000.

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