Excess reserves are affected by
1) reserve requirements
2) the repayment of existing bank loans
3) cash withdrawals

Question

Excess reserves are affected by​
1) reserve requirements
2) the repayment of existing bank loans
3) cash withdrawals​

Quizplus · Accepted Answer

Excess reserves are influenced by reserve requirements because changes in these requirements alter the amount of reserves banks must hold, thereby affecting the amount they can hold as excess. The repayment of existing bank loans affects excess reserves because as loans are repaid, the reserves of a bank increase, potentially increasing its excess reserves. Cash withdrawals impact excess reserves because when cash is withdrawn, the reserves of the bank decrease, which could reduce its excess reserves.

Excess Reserves Are Affected By​

Excess Reserves Are Affected By