What is the reserve requirement?
A) the legal minimal percentage of deposits required to be held in reserve by banks
B) the percentage of reserves that is held only on amounts greater than $50 million
C) the amount of reserves that the Fed wants to inject at a given time
D) the amount of reserves needed for the Fed to provide a given increase in the money supply

Question

Quizplus · Accepted Answer

The reserve requirement is the legal minimum percentage of deposits that banks are required to hold in reserve, as determined by the central bank or government. This is done to ensure that banks have enough funds to cover withdrawals and to prevent excessive risk-taking.

What Is the Reserve Requirement