Question

1.The required reserve ratio is the minimum percentage of​ _____ that​ _____ are required to hold...

1.The required reserve ratio is the minimum percentage of​ _____ that​ _____ are required to hold as reserves.

A.​savings; depository institutions

B.​savings; firms

C.deposits; depository institutions

D.deposits; governments

2.Explain the distinction between a central bank and a commercial bank.

A central bank​ _______. A commercial bank​ _______.

A.takes deposits from governments and firms with assets over​ $2 billion;

is a firm that is licensed to receive deposits and make loans

B.is a​ bank's bank;

conducts monetary policy

C.conducts monetary​ policy:

adjusts the quantity of money in circulation and influences interest rates

D.is a​ bank's bank;

is a firm that takes deposits from households and firms

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Answer #1

1. C.deposits; depository institutions

The required reserve ratio is the percentage of deposits which commercial banks (depository institutions) are required to keep as reserves.The excess reserves are lent out as loan to the general public.

2. D.is a​ bank's bank; is a firm that takes deposits from households and firms.

Central bank is the bank which provides financial services to all the other banks. So it is said to be the bank's bank. Primary function of a commercial bank is accepting deposits and granting loans.

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