One Way to Enhance the Stability of the Banking System

question 253

Multiple Choice

One way to enhance the stability of the banking system is to

• A) require higher bank capitalization, or net worth.
• B) increase the federal funds rate.
• C) reduce the required reserve ratio.
• D) require more leveraging by banks.

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Definitions:

Epiglottis

A leaf-shaped flap of cartilage located behind the tongue, at the top of the larynx, which prevents food and drink from entering the windpipe during swallowing.

Trachea

The windpipe, a tube extending from the larynx to the bronchi, conducting air to and from the lungs in humans and other animals.

pH

A scale used to specify the acidity or basicity of an aqueous solution, with lower values being more acidic and higher values more basic.

Sphincters

Circular muscles that control the passage of substances through the openings of the body.