Total reserves are the sum of ________ and ________.A) excess reserves; borrowed reservesB) required reserves; currency in circulationC) vault cash; excess reservesD) excess reserves; required reserves
Question
Total reserves are the sum of ________ and ________.A) excess reserves; borrowed reservesB) required reserves; currency in circulationC) vault cash; excess reservesD) excess reserves; required reserves
Solution
The answer is D) excess reserves; required reserves.
Step 1: Understand the terms.
- Excess reserves are the reserves banks hold over and above the minimum that the central bank requires.
- Required reserves are the minimum amount of reserves a bank is required to hold by central bank regulations.
Step 2: Apply the terms to the question.
- Total reserves are made up of all the money a bank has in reserve, which includes both the required reserves and any excess reserves.
So, total reserves are the sum of excess reserves and required reserves.
Similar Questions
Reserves held beyond the required amount are called _____________ reserves.Group of answer choicesdemand depositsprecautionaryexcesssurplus
The ________ the amount of excess reserves a bank holds, the ________ the size of the deposit multiplier.
Reserves are a component of: Group of answer choices assets. equity. revenue. liabilities.
Suppose the reserve ratio is RR. Then,Question 10Answera.required reserves = RR × excess reserves.b.required reserves = RR × actual reserves.c.required reserves = RR × loans.d.required reserves = RR × deposits.
Multiple Choice QuestionWhat is the name for the portion of deposits that a bank wants to hold in the form of cash?Multiple choice question.Excess reserves.Bank spreadNet worthTarget reserve
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.