Depository institutions are required to hold reserve assets equal to a fraction of deposit liabilities. That fractions is called the ______________

Question

Quizplus · Accepted Answer

The required fraction of reserve assets that depository institutions must hold is called the required reserve ratio. Option A is incorrect because it describes the result of the required reserve ratio, which is the amount of reserves that must be held. Option C refers to the total amount of reserves that a depository institution holds, including required and excess reserves. Option D refers to any reserves held above the required reserve amount, and is not the term for the required reserve ratio itself.

Depository Institutions Are Required to Hold Reserve Assets Equal to a Fraction