Bank Reserves Are

question 10

Multiple Choice

Bank reserves are:

• A) the fraction of deposits kept in gold with the Federal Reserve.
• B) the deposits lent to finance illiquid investments.
• C) the fraction of deposits kept in the form of very liquid assets.
• D) gold kept in the bank's vault.

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Definitions:

Productive Investment Opportunities

Investments that potentially lead to an increase in productive capacity and economic growth.

Perfect Knowledge

A hypothetical situation where all parties in a market have complete and accurate information about the market conditions and the goods or services involved.

Competitive Markets

Competitive markets are characterized by many buyers and sellers, where no single entity has the power to significantly influence prices for goods and services.

Economic Profits

Profits exceeding the total costs of inputs including opportunity costs, typically representing gains beyond the normal profit levels.