Answer to Question #338567 in Microeconomics for Unknown

Question

According to the classical cash reserve system, which of the following statements is/are true regarding banks in South Africa?

(a) They are required to hold a minimum cash reserve of 2,5% of their deposits.

(b) The level of the repo rate influences the interest rate at which the banks provide credit to individuals.

(c) The SARB provides cash reserves through accommodation policy to the banks experiencing liquidity shortage.

a. (b)

O b. (a)

c. (a) and (b)

O d. (c)

e. (a), (b) and (c)

Answer 1

a. (b)