The ________ is the percentage of its deposits a bank must hold,in cash or on deposit,with a Federal Reserve bank.

Question

Quizplus · Accepted Answer

The reserve requirement is the percentage of deposits that a bank must hold in reserve, meaning in cash or on deposit with a Federal Reserve bank. This requirement is set by the Federal Reserve as a way to control the amount of money that circulates in the economy. The discount rate is the interest rate at which banks can borrow money from the Federal Reserve, the open-market rate is the rate at which government bonds are traded in financial markets, and the prime rate is the interest rate at which commercial banks lend to their best customers. None of these relate directly to the reserve requirement.

The ________ Is the Percentage of Its Deposits a Bank