3 Written Questions
3 Multiple Choice Questions
- The funds that banks and thrifts must deposit with the Federal Reserve Bank (or hold as vault cash) to meet the legal reserve requirement; a fixed percentage of the bank's or thrift's checkable deposits.
- The fraction of checkable deposits that a bank must hold as reserves in a Federal Reserve Bank or in its own bank vault; also called the reserve requirement.
- The multiple of its excess reserves by which the banking system can expand checkable deposits and thus the money supply by making new loans (or buying securities); equal to 1 divided by the reserve requirement.
3 True/False Questions
Actual reserves → The funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash).
Excess reserves → The funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash).
Vault cash → A statement of the assets, liabilities, and net worth of a firm or individual at some given time.