A bank's desired reserve ratio is
A) the ratio of currency to deposits.
B) the ratio of deposits to currency.
C) the ratio of deposits to reserves that a bank wants to hold to meet daily business requirements.
D) the ratio of reserves to deposits that a bank wants to hold to meet daily business requirements.
E) determined by actual reserves less desired reserves.

Question

Quizplus · Accepted Answer

The desired reserve ratio is the fraction of deposits that a bank aims to keep as reserves to meet daily business requirements, such as withdrawals by customers. This ensures the bank has enough liquidity to operate effectively without risking insolvency.

A Bank's Desired Reserve Ratio Is