Assuming a Required Reserve Ratio of 5%,interest Rate on Reserves

question 47

Multiple Choice

Assuming a required reserve ratio of 5%,interest rate on reserves of 1%,and interest rate on loans of 6%,what is the effective cost of the reserve requirement on a $10,000 deposit?

• A) 0.05%
• B) 0.25%
• C) 0.30%
• D) 1%

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Definitions:

Warranty

A guarantee provided by a manufacturer or seller concerning the condition of a product, often promising repair or replacement in specific circumstances.

Defect in Manufacture

A flaw or error in the manufacturing process that results in a product being unsafe or failing to meet intended standards.

Test Drive

The process of operating a vehicle under controlled conditions to evaluate its performance, reliability, or suitability before making a purchase decision.

Bind the Bargain

To make a deal or agreement legally binding, requiring all involved parties to fulfill their obligations as per the terms of the agreement.