The reserve requirement is:
A) the regulation that sets the minimum fraction of deposits banks must hold in reserve.
B) the dollar amount of cash banks must keep on hand and not loan out.
C) currently set at $2 million for most banks.
D) a loose guideline for how much banks must hold in reserves.

Question

Quizplus · Accepted Answer

The reserve requirement is the regulation that sets the minimum fraction of deposits banks must hold in reserve. This means that banks are required to keep a certain percentage of their deposits (typically around 10%) as reserves and not loan out all of the money they receive in deposits.

The Reserve Requirement Is