The minimum percent of deposits that banks must hold and cannot loan is determined by the
A)interest rate.
B)discount rate.
C)required reserve ratio.
D)federal funds rate.
E)ratio of M2 to M1.

Question

Quizplus · Accepted Answer

The required reserve ratio is the minimum percentage of deposits that banks are required to hold and cannot loan out. This ratio is set by the Federal Reserve and is an important tool in controlling the money supply and inflation.

The Minimum Percent of Deposits That Banks Must Hold and Cannot