Some financial institutions are classified as depository institutions based on:a. the way they acquire funds.PO b. the size of the loans they make.c. the number of customers they have.O d. the number of loans they make.e. the amount of reserves they hold.

Financial institutions: - Financial institutions are the companies that indulge in providing…

Some financial institutions are classified as depository institutions based on: a. the way they acquire funds. b. the size of the loans they make. O c. the number of customers they have. d. the number of loans they make. O e. the amount of reserves they hold.

Some financial institutions are classified as depository institutions based on: a. the way they acquire funds. b. the size of the loans they make. O c. the number of customers they have. d. the number of loans they make. O e. the amount of reserves they hold.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

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Some financial institutions are classified as depository institutions based on:
a. the way they acquire funds.
PO b. the size of the loans they make.
c. the number of customers they have.
O d. the number of loans they make.
e. the amount of reserves they hold.

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