The funds that banks are required by law to hold in the form of either vault cash or deposits with the Fed are called
A) excess reserves.
B) fractional reserves.
C) required reserves.
D) certificates of deposit.

Question

Quizplus · Accepted Answer

The funds that banks are required by law to hold in the form of either vault cash or deposits with the Fed are called required reserves. Excess reserves are reserves held by banks in excess of the required amount, while fractional reserves refer to the practice of banks holding only a fraction of their deposits in reserve. Certificates of deposit are a type of time deposit offered by banks to customers.

The Funds That Banks Are Required by Law to Hold