____ in Federal Reserve float causes a(n) ____ in bank funds.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) A and C

Question

Quizplus · Accepted Answer

When there is an increase in Federal Reserve float (the amount of funds that the Federal Reserve has made available to banks through checks that have not yet been cleared), it causes a decrease in bank funds because the banks have not yet received the funds from the checks that are still in transit. Conversely, a decrease in Federal Reserve float would cause an increase in bank funds because the checks would have cleared and the funds would be available to the banks. So, options A and C are both incorrect. Therefore, the correct answer is D.

____ in Federal Reserve Float Causes A(n) ____ in Bank

in Federal Reserve Float Causes A(n) in Bank