The goal of this measure is to reduce the risk in the banking sector.

The goal of this measure is to reduce the risk in the banking sector.

a. Monetary policy.

b. Reserve Requirement.

c. The money multiplier

d. None of the above.

Expert Solution

b. Reserve requirement

reason: Reserve requirement is the amount of funds that a bank holds in reserve to make sure that it is able to meet liabilities if there are sudden withdrawals. Reserve requirements are also a tool for the central bank to increase or decrease money supply in the economy and to influence interest rates.

Thus reserve requirement decreases the risk of inability to meet the liability in the banking sector.

Rahul Sunny answered 2 years ago

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