The quantity of reserves that banks must hold against deposits is called
A) the reserve ratio.
B) excess reserves.
C) total reserves.
D) required reserves.

Question

Quizplus · Accepted Answer

Required reserves are the reserves that banks must hold against deposits as mandated by the central bank. The reserve ratio is the ratio of reserves to deposits, excess reserves are reserves held by banks above the required level, and total reserves are the sum of required and excess reserves. However, the question specifically asks for the reserves that banks must hold, which is the definition of required reserves.

The Quantity of Reserves That Banks Must Hold Against Deposits