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What mechanism is used by commercial banks for providing credit to government?
statutory liquidity ratio
What accurately describes how raising the required reserve reserve ratio reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Banks current ratio should be how much?
The ideal current ratio for banks 1.33 : 1
What are the most five important ratios for banks?
current raiot, working capital ratio, liquidity ratio, capital adequacy ratio, net asset ratio
What is statutory liqudity ratio?
Statutory liqudity ratio means all the banks maintained it in the form of cash in hand (exclusive of the minimum cash reserve ratio),Current account balances with SBI and other public sector commercial banks, unencumbered approved securities and gold. RBI prescribes SLR from 25% to 40%.
Which of the following explains why government sets a required reserve ratio for private banks?
So that the bank's don't run out of money when customers make withdrawals.
What describes how lowering the required reserve ratio reduces the money supply?
When the required reserve ratio is lowered, banks can loan out more money.
Why is raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What mechanism is used by commercial banks for providing credit to government?
statutory liquidity ratio
What accurately describes how raising the required reserve ratio reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What accurately describes how raising the required reserve reserve ratio reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
Which of the following best explains why raising the required reserve ratio results in a decrease in the money supply?
When the required reserve ratio is high, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
What can the Fed accomplish by raising or lowering the required reserve ratio?
If they lower the ratio, banks do not have to hold as much cash (which gains no interest), the banks will attempt to loan this money out and make money, this can stimulate investment. Increase or decrease in the money supply (APEX)
What is the purpose of the required deserve ratio?
The required reserve ratio is a regulation set by central banks that mandates the minimum fraction of deposits banks must hold as reserves and not lend out. Its primary purpose is to ensure financial stability by preventing bank runs, maintaining liquidity, and controlling the money supply in the economy. By influencing how much banks can lend, the reserve ratio also plays a crucial role in monetary policy, helping to regulate inflation and economic growth.
What accurately describes how lowering the required reserve ratio increases the money supply?
When the required reserve ratio is lowered, banks can loan out more money.
Banks current ratio should be how much?
The ideal current ratio for banks 1.33 : 1
What accurately describes how raising the required reserve ratios reduces the money supply?
When the required reserve ratio is raised, banks must loan out a smaller portion of their reserves, resulting in fewer loans.
