Which of the following statements is true ?
A) The simple money multiplier equals the reciprocal of the required reserve ratio.
B) Required reserves is the minimum balance that the Fed requires a bank to hold in vault cash or on deposit with the Fed.
C) The Discount rate is the interest rate charged banks for loans from the Fed.
D) Excess reserves equal total reserves minus required reserves.
E) All of the above.

Question

Quizplus · Accepted Answer

A) This statement is true. The simple money multiplier is calculated as 1/required reserve ratio. 
B) This statement is also true. Required reserves are the minimum amount of funds that a bank must hold either in vault cash or on deposit with the Fed. 
C) This statement is also true. The discount rate is the interest rate that the Fed charges banks for borrowing money. 
D) This statement is also true. Excess reserves are calculated as total reserves minus required reserves. 
Therefore, all of the statements are true.

Which of the Following Statements Is True