if a bank has a reserve ratio of 8 percent, then government regulation requires the bank to use at least 8…

if a bank has a reserve ratio of 8 percent, then government regulation requires the bank to use at least 8 percent of its deposits to make loans. the banks ratio of loans to deposits is 8 percent. the bank keeps 8 percent of its deposits as reserves and loans out the rest. the bank keeps 8 percent of its assets as reserves and loans out the rest.

if a bank has a reserve ratio of 8 percent, then government regulation requires the bank to use at least 8 percent of its deposits to make loans. the banks ratio of loans to deposits is 8 percent. the bank keeps 8 percent of its deposits as reserves and loans out the rest. the bank keeps 8 percent of its assets as reserves and loans out the rest.

Answer

Brief Explanations:

The reserve - ratio is the proportion of deposits that a bank is required to hold as reserves. A reserve ratio of 8 percent means the bank keeps 8 percent of its deposits as reserves and can loan out the remaining 92 percent. It is not about using a percentage of deposits for loans, nor is it the ratio of loans to deposits, and it is based on deposits not assets.

Answer:

the bank keeps 8 percent of its deposits as reserves and loans out the rest.