Rat do Bao with the deposits made at their institution? ake loans equal to 100%

Question

Rat do Bao with the deposits made at their institution? ake loans equal to 100% of the deposits Make loans, but they must be less than total deposits c. Deposit a portion with the Fed as a required reserve b. d. B and C above 9. The minimum level of reserves that banks are required to deposit with the Fed is called the a. Target reserve ratio b. Fed ratio c. Required reserve ratio d. Money multiplier 10. The maximum amount of money that can be created by the banking system is called the a. Target reserve ratio b. Fed ratio c. Required reserve ratio d. Money multiplier

Explanation / Answer

8. d) is correct answer

Bank is an institution which uses its deposit to lend to peoples but it cannot lend whole of the deposited amount because it has to keep some amount of money as a reserve in the form of Rrquired reserve and liquidity reserve.

9 c) is correct answer

There is nothing like fat ratio I get reserve ratio.

Required reserve ratio is defined as the portion of deposited amount which is to be held by bank in hand as cash or in bank.

10.d) is correct answer

It is the amount of money that a bank generate for each dollar of Reserve. it is also defined as the reciprocal of required reserve ratio .it helps in creating money in an economy

Thanxxx

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