Is the purpose of required bank reserves to enhance liquidity and protect commercial bank depositors from losses? Explain.
What will be an ideal response?
No the purpose of reserves is not for liquidity or loss protection, but for control by the Fed. The purpose is to give the Fed some control over banks and their ability to lend money.
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Income accrues to people who supply productive services, which means services that
A) add to the monetary income of the society. B) are in demand. C) contribute to social welfare. D) result in tangible or durable products. E) supply basic wants.
On the 45-degree line diagram, the 45-degree line shows points where
A) real aggregate expenditure equals real GDP. B) real aggregate expenditure equals C + I. C) real income equals real GDP. D) real aggregate output equals the quantity produced.
As a result of contractionary monetary policy
A) interest rates fall, the dollar depreciates, and domestic goods become cheaper, thereby reducing net exports. B) interest rates rise, the dollar appreciates, and domestic goods become more expensive, thereby reducing net exports. C) interest rates rise, the dollar appreciates, and domestic goods become cheaper, thereby reducing net exports. D) interest rates rise, the dollar appreciates, and domestic goods become cheaper, thereby increasing net exports.
In long-run equilibrium, a perfectly competitive firms produces at the output level at which: a. total revenue is maximized
b. long-run marginal cost is minimized. c. average total cost is minimized. d. short-run variable cost is minimized.