The minimum percentage of deposits that a depository institution must hold and cannot use for lending is known as the
A) minimum rate.
B) required reserve ratio.
C) money multiplier.
D) discount rate.

Question

Quizplus · Accepted Answer

The required reserve ratio is the fraction of deposits that a bank is required to hold in reserve and cannot lend out. This is a regulation set by central banks to ensure that banks have enough funds to meet withdrawal demands.

The Minimum Percentage of Deposits That a Depository Institution Must