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JAMB Economics 2012 Question 32

Question 32

Financial Institutions

The minimum amount which banks are required to deposit with the central bank is determined by the

  1. A.liquidity ratio
  2. B.cash reserve ratio
  3. C.minimum lending rate
  4. D.aggregate credit ceiling.
Show the answer and explanation

Answer: B (cash reserve ratio)

Explanation

The cash reserve ratio is the fraction of deposits banks must keep with the central bank.