Question

Reserve requirements are regulations concerning


a. the amount banks are allowed to borrow from the fed.


b. the amount of reserves banks must hold against deposits.


c. reserves banks must hold based on the number and type of loans they make.


d. the interest rate at which banks can borrow from the fed.

Answer 1

B. Reserve requirements are based on the ratio of how many deposits are put into the bank. More deposits = higher reserve requirements. Less deposits = less reserve requirements