The Specific Goals of Central Banks Include All of the Following

question 42

Multiple Choice

The specific goals of central banks include all of the following except:

• A)High stock prices
• B)Low and stable inflation
• C)High and stable real growth
• D)A stable exchange rate

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Definitions:

Reserve Ratio

The fraction of deposits a bank must hold in reserve and not lend out, as dictated by central banking regulations.

Monetary Multiplier

A mechanism that describes the increase in aggregate production and income that results from an injection of spending.

Secondary Reserves

Assets that are not immediately liquid but can be quickly converted into cash without significant loss, serving as a secondary buffer for financial institutions.

Legal Reserve Requirement

The minimum amount of reserves a financial institution must hold against deposits, as mandated by regulatory authorities, to ensure liquidity.