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 the balance on its reserve account at a Federal Reserve Bank.
E)only the currency in its vault.

Question

Quizplus · Accepted Answer

A commercial bank's reserves are composed of currency in the bank's vault and the balance on its reserve account at a Federal Reserve Bank. This can be found in many introductory macroeconomics textbooks. Therefore, the correct answer is D.

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