Ordinarily, banks try to keep excess reserves as low as possible because the Fed requires them to do so it is profitable to do so an excessive level of reserves could cause a run on the bank it looks neater in their accounting records

Ordinarily, banks try to keep excess reserves as low as possible because the Fed requires them to do so it is profitable to do so an excessive level of reserves could cause a run on the bank it looks neater in their accounting records

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter12: Money And The Banking System

Section: Chapter Questions

Problem 3DQ

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Question

Ordinarily, banks try to keep excess reserves as low as possible because:
O the Fed requires them to do so
it is profitable to do so
an excessive level of reserves could cause a run on the bank
it looks neater in their accounting records

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