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

question 66

Multiple Choice

If the required reserve ratio is 10 percent,currency in circulation is $400 billion,checkable deposits are $800 billion,and excess reserves total $0.8 billion,then the excess reserves-checkable deposit ratio is

• A)0.001.
• B)0.10.
• C)0.01.
• D)0.05.

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Definitions:

Market

An arrangement or venue where parties engage in exchange of goods and services.

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction or activity in which they did not directly participate.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service.

Marginal Private Cost

The cost incurred by a firm for producing one additional unit of a good, exclusive of any external costs.