When the Actual Reserve-Deposit Ratio Exceeds the Desired Reserve-Deposit Ratio

question 8

Multiple Choice

When the actual reserve-deposit ratio exceeds the desired reserve-deposit ratio banks:

• A)do nothing because this is a profitable situation.
• B)stop making loans.
• C)send the extra reserves to the central bank.
• D)make more loans.

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Definitions:

Frustrated Contract

A contract that, through no fault of either party, has become impossible to perform, leading to its termination and relieving both parties from their obligations.

Breach of Contract

Occurs when one party fails to fulfill their obligations under the contract’s terms, allowing for legal action by the other party.

Transporter

A transporter refers to an individual or service that moves goods or people from one location to another.

Voidable

Refers to a contract that may appear valid but can be legally declared void at the option of one of the parties.