When the Federal Reserve Notifies Banks That They Must Hold

question 66

Multiple Choice

When the Federal Reserve notifies banks that they must hold fifteen cents for every dollar that is deposited, it is controlling the money supply by using which of the following tools?

• A) reserve requirements ratio
• B) risk
• C) discount rate
• D) open market operations
• E) unable to tell with the information provided

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Definitions:

Limited Class

A category with restrictions in terms of the number or type of members it can include, often used in legal contexts or when issuing securities.

Fraud Detector

A system or process designed to identify fraudulent activities or transactions.

Ultramares Rule

The Ultramares rule is a legal doctrine relating to negligence, limiting the liability of auditors to third parties for financial report errors, except in cases of fraud or gross negligence.

Accountant Liability

Refers to the legal obligation of accountants to perform their duties in accordance with laws and professional standards, under which failure can result in legal or professional penalties.