A commercial bank's reserves are equal to the amount of
A) the bank's deposits.
B) the bank's government securities.
C) the bank's loans.
D) currency in the bank's vault plus its reserve account at a Federal Reserve Bank.
E) only its currency in its vault.

Question

Quizplus · Accepted Answer

A commercial bank's reserves are the currency held in its vaults, and also on its reserve account at a Federal Reserve Bank. Therefore, option D is correct. The deposits of the bank, government securities, or loans are not included in the bank's reserves.

A Commercial Bank's Reserves Are Equal to the Amount of