Table 11-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T-account of the bank is shown below.

-Refer to Table 11-2. The bank's reserve ratio is
A) 7.50 percent.
B) 8.12 percent.
C) 92.50 percent.
D) 100 percent.

Question

Table 11-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T-account of the bank is shown below.
 
-Refer to Table 11-2. The bank's reserve ratio is
A) 7.50 percent. 
B) 8.12 percent. 
C) 92.50 percent. 
D) 100 percent.

Quizplus · Accepted Answer

The reserve ratio is calculated as reserves divided by deposits. If the bank's reserves are 7.50 percent of its deposits, then the reserve ratio is 7.50 percent.