The demand curve for reserves is ________.
A) vertical
B) horizontal
C) upward-sloping
D) downward-sloping

Question

Quizplus · Accepted Answer

The demand curve for reserves is downward-sloping, meaning that banks will demand more reserves at lower interest rates, and less reserves at higher interest rates. As the cost of holding reserves (the opportunity cost of not lending them out) increases with higher interest rates, banks will hold fewer reserves.

The Demand Curve for Reserves Is ________