The reserve requirement is defined as ________
A) the maximum amount of money banks can borrow from the Federal Reserve
B) the maximum amount of money banks can borrow from one another
C) the minimum amount of money banks hold in reserve to cover deposits
D) the minimum amount of money that can be deposited by banks in the Federal Reserve
E) the maximum amount of money that is insured by the Federal Deposit Insurance Corporation
C
Explanation: C) By definition, the reserve requirement is the minimum amount of money banks must hold in reserve to cover deposits. The Federal Reserve can raise or lower the reserve requirement to ensure that banks have enough money to cover deposits.
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