👤
Answered

select the statement that best defines required reserves. the amount of reserves a bank has below the required amount. the amount banks are required by law to hold on each loan. the amount of reserves banks have on hand to satisfy the demands of other competitors. the amount banks are required by law to hold on each deposit.

Answer :

The reserve requirement is the sum of money that a bank is required to hold in reserve in order to meet its obligations in the case of unanticipated withdrawals.

What exactly are Required Reserves?

The central bank uses required reserves as a tool to alter interest rates and the amount of money in the economy.

Banks lend money to clients based on a portion of the available cash. In exchange for this power, the government imposes one obligation on them: maintain a minimum balance of deposits to cover potential withdrawals. The reserve requirement is the amount that banks must hold in reserve and are not permitted to lend above.

  • The reserve requirement is the sum of money that a bank is required to hold in reserve in order to meet its obligations in the case of unanticipated withdrawals.
  • The central bank uses reserve requirements as a tool to alter the amount of money in the economy and affect interest rates.

To know more about Required Reserves, visit:

https://brainly.com/question/9652567

#SPJ1

Go Teaching: Other Questions