Banks that can't meet their reserve requirements
A)must declare bankruptcy and liquidate their assets within 30 days.
B)lose their privilege of borrowing at the discount window for a period of one year.
C)must pay the Fed interest on the deficit at a rate 2% above the discount rate.
D)are subject to criminal penalties, including possible jail terms for their officers.

Question

Quizplus · Accepted Answer

Banks that can't meet their reserve requirements must pay the Federal Reserve interest on the deficit at a rate 2% above the discount rate. This is a monetary policy tool used to ensure banks maintain adequate reserves.

Banks That Can't Meet Their Reserve Requirements