The Basic Purpose of Imposing Legal Reserve Requirements on Commercial

question 161

Multiple Choice

The basic purpose of imposing legal reserve requirements on commercial banks is to

• A) assure the liquidity of commercial banks.
• B) provide a device through which the credit-creating activities of banks can be controlled.
• C) provide a proper ratio between earning and no-earning bank assets.
• D) provide the central banks with necessary working capital.

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Definitions:

Psychological Characteristics

Attributes of an individual's mind and behavior that distinguish them from others, including thoughts, emotions, and personality traits.

Hardiness

A combination of three psychological qualities—commitment, control, and challenge—shared by people who can handle high levels of stress and remain healthy.

Extreme Stress

A condition resulting from events that are perceived as threatening to an individual's safety or stability, causing a significant impact on mental, emotional, and physical well-being.

Social Support System

A network of family, friends, and peers that offer emotional, informational, and instrumental assistance.