An increase in Federal Reserve float
A) decreases bank reserve deposits in the Fed.
B) increases bank reserve deposits in the Fed.
C) has no impact upon bank reserves deposits in the Fed.
D) reduces the net loan granted by the Fed to member banks.

Question

Quizplus · Accepted Answer

An increase in Federal Reserve float temporarily increases bank reserve deposits in the Fed because it represents a temporary double-counting of reserves due to the time lag in check processing.

An Increase in Federal Reserve Float