If a bank is subject to a reserve requirement of 15%, then it is required to
A) place 15% of its deposits in the vault.
B) lend out 15% of its deposits.
C) place 15% of its deposits in the account with its regional Federal Reserve bank.
D) place 15% of its deposits in the account with its regional Federal Reserve bank or the vault.

Question

Quizplus · Accepted Answer

If a bank is subject to a reserve requirement of 15%, it is required to keep 15% of its deposits either in the vault or in the account with its regional Federal Reserve bank. Therefore, choice D is the best answer. Choices A and B are incorrect because the bank is not required to keep or lend out a specific portion of its deposits, but rather to keep a certain percentage in reserves. Choice C is partially correct, but it is incomplete, as the bank may choose to keep its required reserves in either the vault or the account with the regional Federal Reserve bank.

If a Bank Is Subject to a Reserve Requirement of 15