Attempts: Score:11 9-Chapter 53201x, Section .77, Problem 181 Scenario 29-2. The

Question

Attempts: Score:11 9-Chapter 53201x, Section .77, Problem 181 Scenario 29-2. The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. Refer to Scenario 29-2. Assume that banks desire to continue holding the same ratio of excess reserves to deposits. What is the reserve requirement and the reserve ratio for Tazian Banks? a. 5 percent, 8 percent Ob. 4 percent, S percent . 4 percent, 8 percent d. None of the above is correet None of the above is correct Continue without saving

Explanation / Answer

From the information, we find that

Since required reserves are 300 million and deposits are 7500 million required reserve ratio is 300*100/7500 = 4%. Total reserves are 375 million and so total reserve to deposit ratio is 375*100/7500 = 5%. Option B is correct.

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