Reserves are .
A) cash in a bank's vault plus its deposits at Federal Reserve banks
B) cash in a bank's vault plus its gold at Federal Reserve banks
C) gold in a bank's vault plus its gold at Federal Reserve banks
D) cash in a bank's vault plus the cash carried by its customers

Question

Quizplus · Accepted Answer

Reserves refer to the cash a bank keeps in its vault and its deposits at Federal Reserve banks, which are required by law. These reserves serve as a buffer to ensure that a bank has enough money on hand to meet any withdrawals or other obligations. Therefore, A is the best choice as it is the most accurate description of reserves.

Reserves Are