A bank can lend out its excess reserves but not its required reserves.

Question

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Required reserves are the portion of a bank's deposits that it is required to hold in reserve as a precautionary measure against withdrawals. Excess reserves are any reserves held by a bank above the required amount. Banks can lend out these excess reserves to earn interest income, but they cannot lend out their required reserves as they must be kept on hand to meet reserve requirements.

A Bank Can Lend Out Its Excess Reserves but Not