The formula used in the calculations is:
\[ \text{Required reserve ratio} = \frac{\text{Reserves}}{\text{Total deposits}} \]
This calculator computes the required reserve ratio based on the input values of total deposits and reserves. The required reserve ratio is a regulation that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves rather than lend out.
Let's assume the following:
Calculate the required reserve ratio:
\[ \text{Required reserve ratio} = \frac{100}{1,000} = 0.1 = 10\% \]
Therefore, the required reserve ratio for this example is 10%.
