The amount that the bank is legally required to keep on hand is called the:
A) required reserves.
B) demand deposits.
C) federal funds.
D) reserve ratio.

Question

Quizplus · Accepted Answer

Required reserves are the amount of funds that banks must keep on hand in reserve in order to satisfy the reserve requirements set by the central bank (in the US, the Federal Reserve). These reserves can either be held in vault cash or deposited with the central bank. The amount of required reserves is determined as a percentage of a bank's deposit liabilities.

The Amount That the Bank Is Legally Required to Keep