The Target Cash Balance Is Set Optimally Such That It

question 9

True/False

The target cash balance is set optimally such that it need not be adjusted for seasonal patterns and unanticipated fluctuations although it is changed to reflect long-term changes in the firm's operations.

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Definitions:

Checkable Deposits

Bank accounts that allow the account holder to write checks or use debit cards to make payments directly from the account.

New Reserves

Resources or assets that have been newly discovered or identified, often referring to natural resources like oil, gas, or minerals that can be economically extracted.

Reserve Requirement Ratio

The fraction of deposits that banks must hold in reserve and not lend out, as mandated by the central bank.

Checkable Deposits

Bank account balances that can be withdrawn on demand using checks or electronic payment methods without any advance notice.