Excess reserves are

Question

Excess reserves are

Quizplus · Accepted Answer

Excess reserves are the amount of actual reserves held by a bank that exceed the desired reserves. In other words, excess reserves are actual reserves minus desired reserves, which makes option D the correct answer. Option A is incorrect because it incorrectly implies that excess reserves are a result of desired reserves being too high. Option B is incorrect because it refers to required reserves, but excess reserves are a function of actual reserves. Option C is incorrect because liquidity funds are not directly related to excess reserves.

Excess Reserves Are