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.

The data show that Wells Fargo

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.

The data show that Wells Fargo

Quizplus · Accepted Answer

Excess reserves are calculated by subtracting required reserves from total reserves. In 2007, total reserves were 47,450 and required reserves were 2,697, so excess reserves were 44,753. In 2008, total reserves increased to 66,856 but required reserves also increased to 3,005, resulting in fewer excess reserves (63,851). This means that Wells Fargo had fewer excess reserves in 2008 compared to 2007. The required reserve ratio is not given in the table, so it cannot be determined whether it changed or not. Additionally, the data do not provide information on how the reserve ratio relates to loans, so options A and C are not supported by the data.

The Table Below Shows the Data (In Millions)for Wells Fargo