If the Desired Reserve Ratio Is One-Third, Currency in Circulation

question 149

Multiple Choice

If the desired reserve ratio is one-third, currency in circulation is $300 billion, and chequable deposits are $900 billion, then the level of excess reserves in the banking system is ________.

• A) $300 billion
• B) $30 billion
• C) $3 billion
• D) 0

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Definitions:

Supplies Expense

The cost incurred from using supplies during an accounting period, recognized as an expense.

Net Income

The total profit of a business after all expenses and taxes have been subtracted from total revenue.

Inventory

Items that are held by a company for the purpose of selling in the near future or the materials used to produce those goods.

Supplies

Tangible items used in the operation of a business that are not directly associated with the product or service offered.