For a System That Has a Low Utilization Ratio, Decreasing

question 62

True/False

For a system that has a low utilization ratio, decreasing service capacity slightly will have only negligible effect on customer waiting time.

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are required to keep on hand and not loan out, used by central banks to control the amount of money in circulation.

Legal Reserves

Reserves that depository institutions are allowed by law to claim as reserves; vault cash and deposits held at Federal Reserve district banks.

Excess Reserves

Excess Reserves are the reserves that banks hold over and above the legal or required minimum they need to keep against deposits.

Open Market Purchase

A monetary policy operation where a central bank buys government securities from the market in order to inject liquidity and encourage lending and investment.