If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $1000 billion,and excess reserves total $1 billion,then the currency ratio is

Question

Quizplus · Accepted Answer

The currency ratio is the ratio of currency in circulation (C) to checkable deposits (D). 
C/D = (C + E) / (D + E), where E is the excess reserves. 
Plugging in the values, we get:
C/D = (400 +1) / (1000 +1) = 0.401 
Therefore, the currency ratio is 0.40 (rounded to two decimal places), which is closest to option C).

If the Required Reserve Ratio Is 10 Percent,currency in Circulation