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25 Sep 2019

Reserve requirements are regulations concerning:

(i) the interest rate at which funds can be borrowed from the Federal Reserve.

(ii) the maximum amount which can be borrowed from the Federal Reserve.

(iii) the proportion of reserves which the banks must hold against deposits.

(iv) reserved which must be held by the banks on the amount they lend.

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Nestor RutherfordLv2

28 Jun 2019

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Related questions

Reserve requirements are regulations concerning:

(i) the interest rate at which banks can borrow from the Fed.

(ii) the amount banks are allowed to borrow from the Fed.

(iii) reserves banks must hold based on the number and type of loans they make.

(iv) the amount of reserves banks must hold against deposits.

goldcat470

According to statistics provided by the Federal Reserve, the total reserves of commercial banks currently equal $1.63 trillion. Required reserves are $130 billion, so excess reserves total approximately $1.50 Trillion. The reserve requirement is 10 percent on transaction deposits, which include accounts that offer unlimited checking privileges, and there is no reserve requirement on time deposits. Non- transaction deposits currently amount to $2 trillion. Assume that changes in reserves held by banks affect transaction deposits only.

a. According to the information given in the problem, determine the total amount of transaction deposits held in commercial banks.

b. What are the total deposits- transaction and non-transaction - commercial banks?

c. What would happen to deposits if the Fed mandated that commercial banks eliminate their excess reserves?

d. How much would total required reserves be if total deposits remained at the level computed in part b, but the Fed imposed a 2 percent reserve requirement on non-transaction deposits and maintained the same 10 percent requirement on transaction deposits?

e. Would the existing reserves be sufficient to meet reserve requirements if the Fed imposed a 10 percent requirement for both transaction deposits and existing non-transaction deposits?

silverrabbit806

QUESTION 31

The Board of Governors of the Federal Reserve System is

		composed of seven members who are appointed by the President and approved by the Senate.
		composed of 12 members of the Senate and the U.S. House of Representatives.
		elected by the general public.
		composed of representatives from the country's 12 largest commercial banks.

1.11 points

QUESTION 32

The Fed is said to be the "lender of last resort" in that

		it charges a higher interest rate to borrowers than does any other bank.
		it functions as the government's bank only when commercial banks fail to do so.
		it makes loans to individuals whom commercial banks do not believe are credit-worthy.
		it stands ready to lend to any depository institution that it has decided should not fail.

1.11 points

QUESTION 33

The Federal Reserve System acts as the government's fiscal agent by

		providing checking account services for the government.
		preparing the budget the President presents to Congress every year.
		determining how to finance a deficit.
		auditing taxpayers.

1.11 points

QUESTION 34

The Federal Reserve System was established in which year?

		1913.
		1929.
		1865.
		1941.

1.11 points

QUESTION 35

By serving as the lender of last resort,

		the Fed provides check clearing services.
		the Fed aids in the sale of government securities.
		the Fed supervises depository institutions.
		the Fed can prevent bank failures.

1.11 points

QUESTION 36

Depository institutions must

		use and pay for the services of the Federal Reserve System.
		set their interest rates according to schedules established by the Federal Reserve System.
		keep a certain percentage of their deposits as reserves.
		turn over a percentage of their profits to the Federal Reserve System as payment for services provided by the Fed.

1.11 points

QUESTION 37

The Federal Reserve System has

		50 district banks.
		24 district banks.
		12 district banks.
		7 district banks.

1.11 points

QUESTION 38

The part of the Federal Reserve System (the Fed) that holds the reserve balances of depository institutions is

		the Board of Governors.
		the Federal Advisory Committee.
		the Federal Open Market Committee.
		the Federal Reserve district banks.

1.11 points

QUESTION 39

The potential for a financial breakdown at one financial institution to spread throughout the financial system is known as a

		systemic risk.
		liquidity risk.
		lending risk.
		moral hazard.

1.11 points

QUESTION 40

A system in which depository institutions hold reserves that are less than the amount of total deposits is called

		fiat money banking.
		required reserve banking.
		fractional reserve banking.
		central banking system.

1.11 points

QUESTION 41

Total reserves of private banks are

		all customer deposits.
		the minimum amount banks need to hold against time deposits.
		federal reserve notes.
		deposits held at the Fed and vault cash.

1.11 points

QUESTION 42

A statement of assets and liabilities of any business entity is called

		a cash flow statement.
		an income statement.
		a balance sheet.
		a statement of net worth.

1.11 points

QUESTION 43

Which of the following actions has no effect on the total money supply?

		The Federal Open Market Committee buys government securities.
		There is a transfer of deposits from one bank to another bank.
		There is change in the money multiplier.
		The Federal Open Market Committee sells government securities.

1.11 points

QUESTION 44

Given a required reserve ratio of 20 percent, a commercial bank that has received a new deposit of $100 can make additional loans of

		$80.
		$0.
		$400.
		$20.

1.11 points

QUESTION 45

The Federal Open Market Committee has responsibility for

		appointing members to the Board of Governors of the Federal Reserve system.
		issuing orders to buy or sell government securities for the Fed.
		advising the Treasury Department on monetary policy.
		printing money.