If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $800 billion, and excess reserves total $0.8 billion, then the currency ratio is ________.

Question

Quizplus · Accepted Answer

The currency ratio is calculated as the currency in circulation divided by the chequable deposits. Given the currency in circulation is $400 billion and chequable deposits are $800 billion, the currency ratio is $400 billion / $800 billion = 0.5.

If the Desired Reserve Ratio Is Ten Percent, Currency in Circulation