Asked by ahmad sirri on Jul 12, 2024
Verified
Actual reserves minus required reserves equals
A) the required reserve ratio.
B) actual reserves.
C) vault cash plus deposits at Fed District Banks.
D) excess reserves.
Required Reserves
The minimum amount of reserves a bank is required to hold by central bank regulation, aimed at ensuring the bank's liquidity and stability.
Excess Reserves
The surplus funds that a bank or financial institution possesses beyond the mandatory requirements set by regulatory bodies, creditors, or its own internal governance protocols.
- Acquire knowledge about the idea of surplus reserves and their consequences on banking activities and credit extension.
Verified Answer
SP
Stefon PegramJul 16, 2024
Final Answer :
D
Explanation :
Actual reserves minus required reserves equals excess reserves. Excess reserves represent the amount of funds that banks can loan out or invest, which can have an impact on the money supply and interest rates.
Learning Objectives
- Acquire knowledge about the idea of surplus reserves and their consequences on banking activities and credit extension.
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