Table 29-3. An economy starts with $50,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $45,750. The T-account of the bank is shown below.
-Refer to Table 29-3. The bank's reserve ratio is
A)17.5 percent.
B)8.5 percent.
C)91.5 percent.
D)100 percent.

Question

Table 29-3. An economy starts with $50,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $45,750. The T-account of the bank is shown below. 
-Refer to Table 29-3. The bank's reserve ratio is
A)17.5 percent. 
B)8.5 percent. 
C)91.5 percent. 
D)100 percent.

Quizplus · Accepted Answer

The reserve ratio is calculated by dividing the bank's reserves by its total deposits. If the table indicates that reserves are 8.5% of total deposits, then the reserve ratio is 8.5 percent.