Which of the following observations is true of the contemporaneous reserve accounting system?
A)The reserve computation and reserve maintenance periods do not overlap.
B)The maintenance period does not begin until seventeen days after the end of the computation period.
C)It results in a two-day window during which required reserves are known with certainty.
D)It increases the accuracy of information on aggregate required reserve balances.

Question

Quizplus · Accepted Answer

The contemporaneous reserve accounting system results in a two-day window during which required reserves are known with certainty. During this two-day window, banks can adjust their reserve balances to meet the required reserve level without being penalized. This system does not overlap the reserve computation and maintenance periods, but the maintenance period typically begins on the first day after the two-day window. While this system may increase the accuracy of information on individual bank reserve balances, it does not necessarily increase the accuracy of information on aggregate required reserve balances.

Which of the Following Observations Is True of the Contemporaneous