Question

The multiple by which the banking system can lend on the basis of __________ reserves is the reciprocal of the reserve ratio.

A. excess
B. legal
C. required
D. none of the above

Answer 1

option (A) excess

Step-by-step explanation:

Excess reserves are the capital reserves which are held by the bank or any financial institution which is in excess to the capital required by creditors, regulators, or internal controls.

For the commercial banks, it is measured against standard reserve requirement.

The central banking authorities sets the amount of the standard reserve requirement.

hence, The answer is option (A) excess