This bank is obligated to keep 1,000.
According to the given question,
Total deposits = 10,000
Total reserves = 10,000
Legal reserve requirement = 10 percent
We know that,
Initial deposit = Total deposit × LRR
Initial deposit = 10000 × 0.1
Initial deposit = 1000
Therefore, amount required by this bank to keep is 1000.
In the world of finance, money stored in a bank is referred to as a deposit. A deposit is a transaction in which money is delivered to another party to be kept safe. A percentage of money used as security or collateral for the delivery of an item may also be referred to as a deposit.
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