QUESTION 17 Banks earn a profit by O making loans at a lower interest rate than
ID: 2429040 • Letter: Q
Question
QUESTION 17 Banks earn a profit by O making loans at a lower interest rate than the rate that they offer on their deposits O making loans at a higher interest rate than the rates that they offer on their deposits charging an interest rate on their depositors' accounts. O keeping as many reserves on hand as possible. QUESTION 18 Required reserve ratios are the minimum amount of reserves any one bank must hold as a percentage of its deposits. reserves any one bank must hold as a percentage of its loans. deposits any one bank must hold as a percentage of its reserves. reserves any one bank must hold as a percentage of its total assets. QUESTION 19 The Fed is a central bank and as such provides banking services to individuals and firms. s where the Federal Government turns when it needs to borrow does business only with the federal government. provides banking services to banks but not individuals QUESTION 20 The Federal Reserve was established to prevent inflation by decreasing the money supply prevent bad loans by requiring banks to hold reserves stop bank panics by acting as a lender of last resort stimulate the economy by increasing bank reservesExplanation / Answer
17) Banks earn a profit by : making loans at a higher interest rate that the rates they offer on their deposits .
The banks lend money to customers at a higher rate than they pay on deposits in the bank or than they borrow it. The difference, known as the margin or turn, is kept by the bank.
18) Required reserve ratios : reserves any one bank must hold as a percentage of its deposits .
19) The Fed is a central bank and as such : is where the Federal government turns when it needs to borrow .
The Fed serves as a banker's bank and as the government's bank.
20) The Federal Reserve was established to : prevent inflation by decreasing the money supply .