Author Question: What are reserves? Discuss the various types of reserves used in the U.S. banking system. What ... (Read 46 times)

lilldybug07 · **on:** Jun 30, 2018

What are reserves? Discuss the various types of reserves used in the U.S. banking system.

What will be an ideal response?

Question 2

When the level of the stock market is high, investment spending tends to be high, ceteris paribus.

Indicate whether the statement is true or false

manuelcastillo · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Reserves are assets held by a depository institution that are used to meet withdrawal demands. In the U.S. Federal Reserve System, reserves include deposits held by Federal Reserve district banks for depository institutions plus the vault cash in the depository institution. Total reserves are anything that the law allows banks to claim as reserves. Required reserves are the value of reserves the depository institution must hold and excess reserves are the reserves the institution holds in excess of the required reserves.

Answer to Question 2

TRUE