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A

Economics Aug 04, 2020

A.   What is the required reserve ratio?

   

The suggested percentage of total deposits that a bank should keep on reserve

   

The legally mandated percentage of total deposits that a bank must send to the federal reserve bank

   

The legally mandated percentage of total deposits that a bank may invest

   

The legally mandated percentage of total deposits that a bank must keep on reserve.

B. What are excess reserves?

   

Total reserves plus required reserves

   

Total reserves minus required reserves

   

The amount banks can safely invest in high risk activities

   

The amount banks must keep on hand for customers

C. How can banks create money?

   

By borrowing excess reserves

   

By lending required reserves

   

By lending excess reserves

   

By telling the Fed they need more money; and the Fed creates it

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