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Homework answers / question archive / A
A. What is the required reserve ratio?
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The suggested percentage of total deposits that a bank should keep on reserve |
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The legally mandated percentage of total deposits that a bank must send to the federal reserve bank |
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The legally mandated percentage of total deposits that a bank may invest |
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The legally mandated percentage of total deposits that a bank must keep on reserve. |
B. What are excess reserves?
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Total reserves plus required reserves |
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Total reserves minus required reserves |
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The amount banks can safely invest in high risk activities |
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The amount banks must keep on hand for customers |
C. How can banks create money?
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By borrowing excess reserves |
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By lending required reserves |
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By lending excess reserves |
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By telling the Fed they need more money; and the Fed creates it |
