The table below shows the data in millions) for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent.
$$\begin{array} { | c | c | c | }
\hline & 2007 & 2008 \
\hline \text { Loans } & 79 & 100 \
\hline \text { Reserves } & 11 & 11 \
\hline \text { Deposits } & 247 & 266 \
\hline
\end{array}$$
The data show that
A) Wells Fargo was only able to make more loans in 2008 because it gained more deposits.
B) the Federal Reserve must have increased the required reserve ratio.
C) the currency drain ratio increased.
D) Wells Fargo had excess reserves and could create money in 2007.

Question

The table below shows the data in millions) for Wells Fargo Bank in September 2007 and September 2008. Suppose that the required reserve ratio is 3 percent.
$$\begin{array} { | c | c | c | } 
\hline & 2007 & 2008 \
\hline \text { Loans } & 79 & 100 \
\hline \text { Reserves } & 11 & 11 \
\hline \text { Deposits } & 247 & 266 \
\hline
\end{array}$$
The data show that
A) Wells Fargo was only able to make more loans in 2008 because it gained more deposits.
B) the Federal Reserve must have increased the required reserve ratio.
C) the currency drain ratio increased.
D) Wells Fargo had excess reserves and could create money in 2007.

Quizplus · Accepted Answer

Wells Fargo had excess reserves in 2007 because the reserves were $11 million, while the required reserves were only 3% of $247 million in deposits, which is $7.41 million.

The Table Below Shows the Data in Millions) for Wells