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

question 148

Multiple Choice

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

• A) 0.25.
• B) 0.50.
• C) 0.40.
• D) 0.05.

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Definitions:

Accounts Payable

Liabilities owed by a business to its suppliers or creditors for goods and services purchased on credit.

Note Payable

A written promise to pay a certain amount of money at a future date, often including interest.

Borrower

An individual or entity that takes out a loan from another entity or individual under the agreement to repay the amount borrowed, typically with interest.

Creditor

An individual, company, or institution that lends money or extends credit to another party, expecting to be repaid in the future.