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The Federal Reserve Plays a Large Part in Establishing ________

question 7

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The Federal Reserve plays a large part in establishing ________ policy.


Definitions:

Reserve Ratio

The fraction of depositors' balances that banks must have on hand as cash, a regulation set by central banks to ensure liquidity.

Vault Cash

The physical currency that a bank holds in its vault and automatic teller machines (ATMs) as a part of its reserves.

Required Reserve Ratio

The fraction of deposits that regulators require a bank to hold in reserve and not lend out.

Reserves

Funds or material set aside or saved for future use, often used in the context of central banking as currency holdings or commodities like gold.

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