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.

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).

Rahul Sunny answered 2 years ago

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