To find out the reserves of a bank with a reserve ratio of 10 percent and deposits of $2000, we need to apply the reserve ratio to the total deposits.
The reserve ratio is the percentage of deposits that a bank is required to hold as reserves. In this case, the bank must keep 10% of its deposits in reserve.
To calculate the reserves, you can use the formula:
Reserves = Deposits × Reserve Ratio
Plugging in the numbers:
Reserves = $2000 × 0.10 = $200
Therefore, the bank’s reserves amount to $200. This means that out of the $2000 in deposits, the bank is required to keep $200 on hand as reserves to meet withdrawal demands and comply with regulatory requirements.