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a bank receives a deposit of $25,000. if the reserve ratio is 25 percent, the loan creation process can potentially create of new money.

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A bank receives a deposit of $25,000. if the reserve ratio is 25 percent,The loan creation process can potentially create of new money $6250

Explanation:

Reserve Ratio = Reserve maintained with Central Bank / Bank Deposits * 100%

25% of 25000

=25/100*25000

=6250

What is Reserve ratio?

  • The term "reserve ratio" describes the percentage of total deposits that commercial banks are required to hold in cash reserves at the central bank; these reserves cannot be used for any commercial lending.
  • The country's central bank, in the instance of the United States, the Federal Reserve, determines the reserve ratio requirement.
  • The calculation for a bank can be obtained by dividing the bank deposits by the cash reserve held with the central bank, and it is expressed as a percentage.
  • Reserve Ratio = Reserve maintained with Central Bank / Bank Deposits * 100%

To learn more about Reserve ratio refer to :

https://brainly.com/question/13758092

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