Final answer:
The answer is A. reserve ratio. Dividing a commercial bank's required reserves by its checkable deposit liabilities produces the reserve ratio.
Step-by-step explanation:
The answer to the question is A. reserve ratio. Dividing a commercial bank's required reserves by its checkable deposit liabilities produces the reserve ratio. The reserve ratio is the fraction of deposits that the bank wishes to hold as reserves.
The reserve ratio is an important indicator of a bank's ability to meet its obligations. It is used by regulators to ensure that banks have enough reserves to cover withdrawals and to maintain stability in the banking system.
For example, if a bank has deposits of $1,000,000 and a required reserve ratio of 10%, it would need to hold $100,000 in reserves. This reserve ratio helps determine the amount of money a bank can loan out and the potential for money creation in the economy.