Regulations on the
A) maximum amount of reserves that banks can hold against deposits are called reserve requirements.
B) minimum amount of reserves that banks must hold against deposits are called reserve requirements.
C) extent to which banks can buy and sell bonds are called open-market requirements.
D) extent to which banks can make new loans are called open-market requirements.

Question

Quizplus · Accepted Answer

Reserve requirements are the minimum amount of reserves that banks must hold against deposits. This is to ensure that banks have enough funds to cover any potential withdrawals by depositors. It is set by the central bank and varies depending on the country and economic conditions.