The incentive of holding excess reserves is equal to

Name: The incentive of holding excess reserves is equal to
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Question

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The incentive of holding excess reserves is the interest rate earned on excess reserves. Banks earn interest on their excess reserves held with the Federal Reserve, so the higher the interest rate on excess reserves, the greater the incentive for banks to hold excess reserves. A and B are incorrect as they are not related to the incentive of holding excess reserves.

The Incentive of Holding Excess Reserves Is Equal to