One Reason Why Banks Are Required to Deposit a Minimum

question 93

Multiple Choice

One reason why banks are required to deposit a minimum amount of reserves at the Federal Reserve is so that

• A) banks will have more liquidity.
• B) banks will be able to make more loans.
• C) depositors will feel their deposits are protected.
• D) the Federal Reserve can own a portion of all banks they regulate.
• E) the Federal Reserve can control the ability of banks to lend money to others.

---

Definitions:

Part-Time Employees

Workers who are employed for fewer hours than the full-time standard, often receiving reduced benefits and compensation.

Implicit Marginal Tax Rate

The amount of additional (marginal) earnings that must be paid explicitly in taxes or implicitly in the form of reduced income supplements. The marginal tax rate establishes the fraction of an additional dollar earned that an individual is permitted to keep, so it is an important determinant of the incentive to work and earn.

Poverty Level

The minimum level of income deemed necessary to achieve an adequate standard of living in a given country or region.

HealthCare Crisis

A critical situation that arises due to the inability of the healthcare system to adequately provide for the medical needs of the population.