The rapid increase in bank reserves that began in 2008 was a result of A. an increase in the number of commercial banks. B. the Fed printing money. C. banks making more loans. D. the Fed purchasing assets. ID: 14.1-27
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Bank reserves refer to the funds that banks hold in their accounts at the central bank (in the US, this is the Federal Reserve). These reserves are required by law and are used to ensure that banks have enough funds to meet their obligations and maintain stability Show more…
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The actual reason that banks must hold required reserves is: a. To enhance liquidity and deter bank runs. b. To help fund the Federal Deposit Insurance Corporation, which insures bank deposits. c. To give the Fed control over the lending ability of commercial banks. d. To help increase the number of bank loans.
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When the central bank lowers the reserve requirement on deposits: a) the money supply increases and interest rates decrease. b) the money supply decreases and interest rates increase. c) the money supply and interest rates increase. d) the money supply and interest rates decrease.
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The federal funds rate is the interest rate that A. banks charge one another for loans. B. banks charge the Fed for loans. C. the Fed charges banks for loans. D. the Fed charges congress for loans. To increase the money supply, the Fed could A. sell government bonds. B. decrease the discount rate. C. increase the reserve requirement. D. None of the above is correct.
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