One Key Difference Between the Fed and the European Central

question 65

Multiple Choice

One key difference between the Fed and the European Central Bank (ECB) in their reserve requirements is that the:

• A)Reserve requirements of the ECB are at a much higher rate than the Fed's
• B)ECB's reserve requirements are more difficult for banks to predict
• C)Reserve requirement of the ECB are determined annually
• D)ECB reserve requirement is based on all of a bank's liabilities

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Definitions:

Economic Activity

Actions that involve the production, distribution, and consumption of goods and services within an economy.

Resource Allocation

The process of assigning available resources to specific uses chosen among many possible and competing alternatives.

Price Controls

Government-imposed limits on the prices that can be charged for goods and services in the market to control inflation or ensure affordability.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.