If the desired reserve ratio is ten percent, currency in circulation is $400 billion, chequable deposits are $1000 billion, and excess reserves total $1 billion, then the excess reserves-chequable deposit ratio is ________.

Question

Quizplus · Accepted Answer

The excess reserves-chequable deposit ratio is calculated by dividing the excess reserves by the chequable deposits. In this case, it is $1 billion / $1000 billion = 0.001.

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