Assuming a Required Reserve Ratio of 8%,interest Rate on Reserves

question 44

Multiple Choice

Assuming a required reserve ratio of 8%,interest rate on reserves of 0.5%,and interest rate on loans of 4%,what is the effective cost of the reserve requirement on a $1,000 deposit?

• A) 0.05%
• B) 0.28%
• C) 0.32%
• D) 4%

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Definitions:

Functional Area

Represents a specific department or section within an organization, focusing on a particular set of tasks or responsibilities.

Lowest Cost

The minimum expense necessary to achieve a specific objective, often considered in decision-making processes.

Flexible Capacity

The capability of a production system to adjust and reallocate its resources to accommodate changes in demand or production requirements efficiently.

Open Ended Wrenches

Tools with a U-shaped opening that grips two opposite faces of the bolt or nut, allowing for manipulation in tight spaces.