Banks would be expected to minimize holding excess reserves because this practice is:
A) illegal.
B) not profitable.
C) technically difficult.
D) subject to a stiff excess reserves tax.

Question

Quizplus · Accepted Answer

Holding excess reserves is not profitable for banks because they earn no interest on these reserves. Therefore, it is in the best interest of banks to minimize their excess reserves.

Banks Would Be Expected to Minimize Holding Excess Reserves Because