Question

The currency-deposit ratio is determined by: A) the Federal Reserve. B) business policies of banks and the laws regulating banks. C) preferences of households about the form of money they wish to hold. D) the Federal Deposit Insurance Corporation (FDIC).

Answer 1

Answer:

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Explanation:

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Answer 2

The currency-deposit ratio is determined by ( A) the Federal Reserve.

• For the most part, the size of the money supply is determined by the Fed. The Fed control is not 100% .
• People can choose to hold more money or less currency relative to bank deposits, and banks may or may not choose to loan all excess reserves.

What is the currency deposit ratio ?

• The link between a person's cash holdings and the amount she keeps in easily accessible bank accounts, like checking accounts, is known as the currency-deposit ratio.
• The currency-deposit ratio is calculated using the formula cr = C/D.
• According to the instructions of the central bank, the cash reserve ratio is the portion of deposits that commercial banks must retain on hand.

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