The reserve-requirement ratio

A) is raised for banks that frequently use the Federal Reserve's discount window.
B) applies uniformly to all accounts in all financial institutions.
C) has been a relatively passive tool of monetary policy.
D) implies a potential deposit expansion multiplier of approximately sixteen.
E) is changed frequently to offset government fiscal policies.

Reserve-Requirement Ratio

The fraction of deposits that banks are required by law to keep on hand as reserves or at the central bank.

Monetary Policy

Actions undertaken by a central bank to control the money supply and interest rates in the economy.

Deposit Expansion Multiplier

A ratio that measures the potential increase in total bank deposits that can result from an initial deposit, based on the reserve requirement ratio.