$1000. is the correct option to the given question. A bank receives a $5000 deposit and the reserve ratio is 25 percent. For this deposit, the bank is required to keep in $1000.
Simply dividing the amount of money a bank must keep in reserve by the amount of money it has on deposit yields the required reserve ratio. For instance, if a bank had to hold $500,000 in reserves along with its $10 million in deposits, the minimum reserve ratio would be 1/20, or 5%.
The funds that bank clients have deposited there. It is obvious that there is less of a chance of a bank run the larger the reserve ratio. A percentage of 100% indicates that the bank would have all of its customers' money available even if they all sought to withdraw it.
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