If a bank is subject to a reserve requirement of 3% and its reserve ratio is 1%, this bank is considered highly liquid.

Name: If a bank is subject to a reserve requirement of 3% and its reserve ratio is 1%, this bank is considered highly liquid.
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Question

Quizplus · Accepted Answer

A reserve ratio of 1% is lower than the required reserve ratio of 3%, indicating that the bank is not highly liquid as it is not holding enough reserves to meet its obligations.

If a Bank Is Subject to a Reserve Requirement of 3