A bank is reserve deficient when
A) its reserves fall short of the level determined by the required reserve ratio.
B) its excess reserves are greater than its required reserves.
C) its required reserves are greater than its excess reserves.
D) it purchases government securities from the Fed.

Question

Quizplus · Accepted Answer

A bank is considered reserve deficient when its reserves fall short of the level determined by the required reserve ratio. This means that the bank does not have enough reserves to meet the minimum requirement set by the central bank. As a result, the bank may need to borrow funds or sell assets to increase its reserves and meet its obligations.

A Bank Is Reserve Deficient When