ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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goes to the Feds to invest.
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are available to loan out
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are kept in the vault
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is much less than the % in RR
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Detailed explanation-1: -The Federal Reserve requires banks and other depository institutions to hold a minimum level of reserves against their liabilities. Currently, the marginal reserve requirement equals 10 percent of a bank’s demand and checking deposits.
Detailed explanation-2: -banks must keep 20 percent of each deposit and then can lend out the rest. As borrowers pay back loans, or banks get additional deposits, banks can continue to lend out money.
Detailed explanation-3: -Bank Reserves-Key takeaways The amount of assets that must be kept on hand to meet any withdrawals is known as a reserve requirement. There are three main types of bank reserves: required, excess, and legal.
Detailed explanation-4: -Key Takeaways Reserve requirements are the amount of funds that a bank holds in reserve to ensure that it is able to meet liabilities in case of sudden withdrawals. Reserve requirements are a tool used by the central bank to increase or decrease the money supply in the economy and influence interest rates.