The minimum percentage of deposits that a depository institution must hold and cannot use for lending is known as the
A) money multiplier.
B) minimum rate.
C) discount rate.
D) required reserve ratio.

Question

Quizplus · Accepted Answer

The minimum percentage of deposits that a depository institution must hold and cannot use for lending is known as the required reserve ratio. This helps to ensure that banks have enough money on hand to meet the demands of their customers and prevent a run on the bank.

The Minimum Percentage of Deposits That a Depository Institution Must