Consider this T-account for your bank, which shows that you deposited $100 into your checking account and that your bank then made a $75 loan to Michelle. $$\begin{array} { l l }
\text { Assets } & \text { Liabilities } \
+ \$ 100 \text { (cash) } & + \$ 100 \text { (increase in your checking account) } \
+ \$ 75 \text { (loan to Michelle) } & + \$ 75 \text { (increase in Michelle's checking account) }
\end{array}$$ Your bank's reserve ratio is:

Question

Consider this T-account for your bank, which shows that you deposited $100 into your checking account and that your bank then made a $75 loan to Michelle. $$\begin{array} { l l } 
\text { Assets } & \text { Liabilities } \
+ \$ 100 \text { (cash) } & + \$ 100 \text { (increase in your checking account) } \
+ \$ 75 \text { (loan to Michelle) } & + \$ 75 \text { (increase in Michelle's checking account) }
\end{array}$$ Your bank's reserve ratio is:

Quizplus · Accepted Answer

The reserve ratio is calculated as reserves divided by deposits. The bank has $25 in reserves ($100 deposit - $75 loan), and $100 in deposits, so the reserve ratio is 25/100 = 25%. However, none of the given options match this calculation, indicating a potential error in the question or options.

Consider This T-Account for Your Bank, Which Shows That You