Question

Excess reserves are equal to Question 9 options: A) total reserves minus discount loans. B) vault cash plus deposits with Federal Reserve banks minus required reserves. C) vault cash minus required reserves. D) deposits with the Fed minus vault cash plus required reserves.

Answer 1

Answer:

The correct answer is B) vault cash plus deposits with Federal Reserve banks minus required reserves.

Explanation:

Excess reserves refer to capital reserves held by a financial institution or institution in addition to what is required or regulated by regulatory entities or other internal controls in the countries. This practice allows them to handle external situations that affect the market, or allocate it to other items to generate profitability.