The effective reserve ratio is determined primarily by:
A) how liquid banks wish to be.
B) how greedy banks wish to be.
C) the number of bank customers.
D) the size of banks' vaults.

Question

Quizplus · Accepted Answer

The effective reserve ratio is determined primarily by how liquid banks wish to be. Banks can choose to hold more reserves than required by regulations in order to make themselves more secure, or they can hold fewer reserves to make more money available for lending and investments. The reserve ratio is also influenced by factors such as the demand for loans and the availability of deposits.

The Effective Reserve Ratio Is Determined Primarily By