Question

In: Economics

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

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.



Solutions

Expert Solution

Solution:

One way to reduce risk in banking sector is using reserve requirement. Reserve requirement ratio is simply the ratio/reaction of deposits that all commercial banks are requiere to set asif as reserves (meaning they van not be lent out). In case of any mishap, to mitigate risk and fluctuation, these reserves can be used.

Thus, the correct option is (b).


Related Solutions

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 multiplierd. None of the above.
10. The goal of this measure is to reduce the risk in the banking sector.
10. The goal of this measure is to reduce the risk in the banking sector.a. Monetary policy.b. Reserve Requirement.c. The money multiplierd. None of the above.12. Two men have given up looking for a job. One of them gave up looking 20 days ago. The other gave up 45 days ago when he became hopeless. A third man is a part-time worker, but would like a full-time job. Which of the following statements is true?a. Under U3 unemployment, the two...
What are the financial risk management strategies applicable to banking sector?
What are the financial risk management strategies applicable to banking sector?
What is the goal of Universal Basic Income? Does it reduce inequality? Does it Reduce poverty?...
What is the goal of Universal Basic Income? Does it reduce inequality? Does it Reduce poverty? What are some arguments for and against Universal basic income?
2. Recessions affect banking sector performance and sometime may lead to banking insolvency. Please explain how...
2. Recessions affect banking sector performance and sometime may lead to banking insolvency. Please explain how recessions affect banking performance and how it may lead to banking insolvency?
1.   Because of the panic in the banking sector, a small retail bank (which is a...
1.   Because of the panic in the banking sector, a small retail bank (which is a subsidiary of a major finance group) is facing a bank run so that it needs short-term liquidity to restore depositors’ confidence. The bank run is expected to end within the next 2 or 3 days. The bank is holding a significant amount of U.S. Treasury securities and its management is considering whether they should sell some of these securities, or else seek for help...
In the 1980s, the then RBI Governor decided to computerize banking operations in the public sector...
In the 1980s, the then RBI Governor decided to computerize banking operations in the public sector banks. Anticipating resistance from the staff and union, he communicated the need of computerization due to global growth and technological advancement. Initially, only a few computers were installed for data collection and analysis. Gradually it was extended to cheque clearing operations. As collection of cheques became faster, over the next few years, computerization of clearing operations was taken up in key metros and other...
What are the impact and challenges of blockchain equity crowdfunding for the financial sector and banking...
What are the impact and challenges of blockchain equity crowdfunding for the financial sector and banking sector ?
Standardization in Islamic Banking is required to reduce confusion. Discuss the confusion.
Standardization in Islamic Banking is required to reduce confusion. Discuss the confusion.
In an effort to stabilize the banking sector and keep banks lending, from October 2008 to...
In an effort to stabilize the banking sector and keep banks lending, from October 2008 to September 2009, the Fed _____. raised reserve requirements lowered the federal funds target rate declared a series of bank holidays to give banks a chance to recover from excessive withdrawals from customer accounts raised the amount of interest paid on reserves held at Fed banks
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT