Why are there periodic increases in borrowing in the banking system?
A)Payments on discount loans are due periodically.
B)Trading volume on the New York Stock Exchange peaks periodically.
C)Banks must satisfy reserve requirements periodically.
D)Banks make their federal tax payments periodically.

Question

Quizplus · Accepted Answer

Banks are required to maintain minimum reserve ratios as mandated by the Federal Reserve. Periodic increases in borrowing occur when banks find their reserves in deficit and must borrow from other banks or the Federal Reserve to meet the reserve requirements.

Why Are There Periodic Increases in Borrowing in the Banking