Answered: 1. The amount of funds that a bank…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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Question

1. The amount of funds that a bank chooses to keep on hand beyond what it is required to is called:

excess reserves.

excess deposits.

federal funds.

extra holdings.

2. Suppose Bank Y currently has $300M in demand deposits and $45M in reserves. Bank Xs reserve ratio is

10%

12%

15%

None of the above

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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