The Portion of Deposits That a Bank Is Required to Hold

question 41

Multiple Choice

The portion of deposits that a bank is required to hold on reserve is referred to as its:

• A) total reserve ratio.
• B) excess reserves.
• C) legal reserves.
• D) required reserve ratio.

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Definitions:

Inflation

The uplift in the aggregate price level for goods and services, reducing the efficacy of buying power.

Real GDP

Gross Domestic Product adjusted for inflation, which provides a more accurate depiction of an economy's size and how it's growing over time.

Inflation

An across-the-board inflation in prices resulting in a diminished capacity of money to purchase goods and services.

Per Capita GDP

Gross Domestic Product per person, a measure of a country's economic output that accounts for its population.