ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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excess reserves
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required reserves
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actual reserves
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army reserves
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Detailed explanation-1: -Historically, the reserve rate has ranged from zero to 10% of bank deposits. Bank reserves are the minimal amounts of cash that banks are required to keep on hand in case of unexpected demand. Excess reserves are the additional cash that a bank keeps on hand and declines to loan out.
Detailed explanation-2: -Cash kept on hand in a depository institution’s vault to meet day-to-day business needs, such as cashing checks for customers; can be counted as a portion of the institution’s required reserves.
Detailed explanation-3: -Actual reserves are amounts of money that the bank actually has on hand at any given moment. This includes amounts in the bank’s vault, as well as in the Federal Reserve. This amount might differ from the amount that banks are required to hold.
Detailed explanation-4: -Formulas: Total Reserves = Cash in vault + Deposits at Fed. Excess Reserves are used by banks to: make loans.