Which of the following is not true about excess reserves?
A) They change when the reserve requirement changes.
B) They are equal to the required reserve ratio times transactions deposits.
C) They are bank reserves beyond what the bank is required to hold.
D) They represent the dollars an individual bank can lenD.

Question

Quizplus · Accepted Answer

Excess reserves are bank reserves beyond what the bank is required to hold. They represent the dollars an individual bank can lend. They are not equal to the required reserve ratio times transactions deposits since required reserves are determined by this ratio, not excess reserves. Excess reserves do not change when the reserve requirement changes, as they are independent of it.

Which of the Following Is Not True About Excess Reserves