The reserve ratio is the percentage of every dollar deposited in a checking account that a bank must maintain in reserves. This reserve requirement is set by the Federal Reserve to ensure that banks have enough funds to cover customer withdrawals and protect against bank runs.

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The Reserve Ratio Is

Question 38

Multiple Choice

The reserve ratio is

A) the percentage of every dollar deposited in a checking account that a bank must maintain in reserves.
B) the percentage of every dollar deposited in a checking account that a bank may loan out.
C) the ratio of loans to available reserves.
D) the ratio of available reserves to loans made.

Correct Answer: