Question
The minimum amount of reserves a bank must hold as a percentage of its deposits. Lowering it increases the money supply while raising it restricts it. Discount Rate Federal Funds Rate Reserve Requirement Real Interest Rate
Solution
4
(104 Votos)
Olivia Maria
Profissional · Tutor por 6 anos
Resposta
Reserve Requirement
Explicação
## Step 1: Understand the question. The question is asking about the minimum amount of reserves a bank must hold as a percentage of its deposits. This is a concept in banking and monetary policy.## Step 2: Identify the correct term. The term that fits this description is "Reserve Requirement". The reserve requirement is the minimum amount of reserves a bank must hold as a percentage of its deposits. Lowering it increases the money supply while raising it restricts it.## Step 3: Explain why the other options are incorrect. The Discount Rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility. The Federal Funds Rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight. Real Interest Rate is an interest rate that has been adjusted for the effect of inflation.