A reserve requirement set by the Federal Reserve is the:
A)minimum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
B)maximum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
C)minimum amount of currency banks must hold in their vaults.
D)maximum amount of currency banks are allowed to hold in their vaults.

Question

Quizplus · Accepted Answer

Congress granted the Fed the power to set minimum values of the reserve-deposit ratio for commercial banks. The legally required values of the reserve-deposit ratio set by the Fed are called reserve requirements.

A Reserve Requirement Set by the Federal Reserve Is The