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

question 204

Multiple Choice

If the required reserve ratio is 10 percent,currency in circulation is $1,200 billion,checkable deposits are $1,600 billion,and excess reserves total $2,500 billion,then the excess reserves-checkable deposit ratio is

• A)1.56.
• B)0.48.
• C)0.72.
• D)0.56.

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Definitions:

Cashier's Checks

A check issued by a bank, drawn on its own funds rather than on one of its depositor's accounts, ensuring the availability of funds for the payee.

Certified Checks

Checks guaranteed by a bank, indicating that the signer had enough funds in their account to cover the amount at the time of certification.

Internal Control Policies

Procedures and protocols implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Sarbanes-Oxley Act

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures.