(Table: Central Bank Balance Sheet) From the information given, what can we can determine the backing ratio to be?
A) 50%
B) 95%
C) 45%
D) 5.2%

Question

(Table: Central Bank Balance Sheet) From the information given, what can we can determine the backing ratio to be? 
A) 50% 
B) 95% 
C) 45% 
D) 5.2%

Quizplus · Accepted Answer

The backing ratio is calculated as the ratio of total assets (sum of gold and foreign exchange reserves, government securities and other assets) to the total liabilities (currency in circulation and reserves of commercial banks). From the table, total assets are 1500+24000+6000=31500 and total liabilities are 17000+14000=31000. Therefore, the backing ratio is (31500/31000) x 100 = 101.6%, which is closest to option B, 95%.

(Table: Central Bank Balance Sheet) from the Information Given, What