Regulations making it obligatory for depository institutions to keep a certain fraction of their deposits in accounts with the Fed are
A) open market operations.
B) federal funds rate.
C) required reserve ratio.
D) reserve requirements.

Question

Quizplus · Accepted Answer

Regulations making it obligatory for depository institutions to keep a certain fraction of their deposits in accounts with the Fed are known as reserve requirements. Therefore, the correct choice is Option D. Option A (Open market operations) refers to the buying and selling of government securities by the Federal Reserve with the aim of influencing the money supply and interest rates. Option B (Federal funds rate) refers to the interest rate at which banks lend money to each other overnight. Option C (Required reserve ratio) is another way of referring to the reserve requirements.

Regulations Making It Obligatory for Depository Institutions to Keep a Certain