The primary reason commercial banks must keep required reserves on deposit at the Fed is to
A. allow the Fed to control the amount of bank lending.
B. ensure that depositors can withdraw their money if they wish to.
C. add to the liquidity of the commercial bank.
D. protect the deposits in the commercial bank against losses.
Answer: A
You might also like to view...
Refer to Table 8.1. That the firm is perfectly competitive is evident from its
A) increasing marginal cost. B) increasing total cost. C) zero economic profits. D) constant marginal revenue. E) absence of marginal values at Q = 0.
Which of the following is correct? A general assumption in real business cycle models is that
a. dissimilar individuals populate the economy. b. the labor market does not clear. c. the economy is populated by a group of identical individuals. d. the economy experiences involuntary unemployment.
If real interest rate in Country X increases relative to the real interest rate in Country Y and there are no trade barriers between the two countries, then for Country X which of the following will be true of its capital flow, the value of its currency, and its exports?
(a) Inflow / Appreciation / Increase (b) Inflow / Appreciation / Decrease (c) Inflow / Depreciation / Increase (d) Outflow / Depreciation / Increase (e) Outflow / Appreciation / Decrease
When total revenue minus total cost is equal to zero, the firm is:
A. earning above-average economic profit. B. earning a normal profit. C. losing too much money to stay in business. D. earning abnormally low profits.