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Questions and Answers
What are reserves for the banks and the Fed, respectively?
What are reserves for the banks and the Fed, respectively?
- Assets for both the banks and the Fed
- Liabilities for the banks, assets for the Fed
- Liabilities for both the banks and the Fed
- Assets for the banks, liabilities for the Fed (correct)
What is the term for the additional reserves that banks choose to hold?
What is the term for the additional reserves that banks choose to hold?
- Optional reserves
- Voluntary reserves
- Excess reserves (correct)
- Supplementary reserves
What does the Fed do when it takes actions to increase reserves?
What does the Fed do when it takes actions to increase reserves?
- Increases liquidity in the banking system (correct)
- Increases the reserve requirements for banks
- Has no impact on liquidity in the banking system
- Decreases liquidity in the banking system
What is the term for the deposits that the Fed requires banks to hold as reserves?
What is the term for the deposits that the Fed requires banks to hold as reserves?
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What is the term for the currency physically held by banks?
What is the term for the currency physically held by banks?
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