Reserve requirements are regulations concerning
A)the amount banks are allowed to borrow from the Fed.
B)the amount of reserves banks must hold against deposits.
C)reserves banks must hold based on the number and type of loans they make.
D)the interest rate at which banks can borrow from the Fed.

Question

Quizplus · Accepted Answer

Reserve requirements refer to the amount of money that banks are required to hold in reserve against customer deposits. The purpose of these requirements is to ensure that banks have enough funds available to meet the demands of their customers, as well as to help stabilize the banking system overall. Therefore, the correct option is B, which refers to the amount of reserves that banks must hold against their deposits. A, C, and D are all incorrect, as they do not accurately describe the purpose or application of reserve requirements.

Reserve Requirements Are Regulations Concerning