Which of the Following Is True Regarding the Required Reserve

question 408

Multiple Choice

Which of the following is true regarding the required reserve ratio?

• A) The ratio is only enforced against banks that are operating in a risky manner.
• B) The ratio determines the amount of excess reserves a bank must hold.
• C) The ratio determines the legally required amount of reserves a bank must hold.
• D) None of the above answers is correct.

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Definitions:

Collectively Exhaustive

A property of a set of events that ensures all possible outcomes are covered, leaving no possibility out.

Probability

A numerical measure of the likelihood of a specific event occurring, ranging from 0 to 1.

Mutually Exclusive

Mutually exclusive refers to events in probability and statistics that cannot occur at the same time, indicating that the occurrence of one event necessarily excludes the occurrence of the other.

Collectively Exhaustive

A set of events is collectively exhaustive if at least one of the events must occur.