Question

Which of the following statements is true? question 10 options:

O the simple money multiplier equals the reciprocal of the required reserve ratio.
O required reserves is the minimum balance that the fed requires a bank to hold in vault cash or on deposit with the fed.
O the discount rate is the interest rate charged banks for loans from the fed.
O excess reserves equal total reserves minus required reserves.
O all of the above.

Answer 1

The statement that is true is: The discount rate is the interest rate charged banks for loans from the fed.

Step-by-step explanation:

The statement that is true is:

1. The discount rate is the interest rate charged banks for loans from the fed.

Out of the options provided, the only true statement is that the discount rate is the interest rate charged banks for loans from the Federal Reserve. The simple money multiplier is not equal to the reciprocal of the required reserve ratio; rather, it is calculated as 1/reserve ratio. Required reserves refer to the minimum balance that the Fed requires banks to hold in vault cash or on deposit with the Fed. Excess reserves are calculated as total reserves minus required reserves.