The demand for reserves is
A)less than required plus desired excess reserves.
B)more than required plus desired excess reserves.
C)equal to the demand for required plus desired excess reserves.
D)equal to required minus desired excess reserves.

Question

Quizplus · Accepted Answer

The demand for reserves is equal to the demand for required plus desired excess reserves. This includes both the amount of reserves that banks are required to hold by law (required reserves) and any additional reserves that they may choose to hold voluntarily (desired excess reserves). Therefore, the total demand for reserves is equal to the sum of required and desired excess reserves.

The Demand for Reserves Is