Suppose a bank has $6,000 in checkable deposits and the required reserve ratio is 0.2.If the bank wishes to hold no excess reserves,its actual reserves will be:

A) $4,000.
B) $1,200.
C) $3,000.
D) less than $1,000.
E) $4,800.

Required Reserve Ratio

The fraction of deposits that regulators require a bank to hold in reserve and not lend out, in order to ensure bank stability and liquidity.

Excess Reserves

The funds that banks hold over and above the legally mandated minimum to safeguard bank liquidity, which can also be lent out.

Actual Reserves

The funds that a bank has on hand or deposited with the central bank, available for immediate use.