Banks Hold Some Deposits on Reserve at the Fed Because

question 95

Multiple Choice

Banks hold some deposits on reserve at the Fed because

• A)the Fed requires every bank to hold at least $100 million on deposit at all times.
• B)the Fed will insure those deposits, but will not insure regular bank deposits.
• C)these are membership dues for being a member bank.
• D)these deposits meet the reserve requirements of the Fed.

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Definitions:

Economic Equivalent

A financial concept that refers to the equivalence in value between different sums of money received or paid at different times, based on a specified interest rate.

Previous March

Refers to March of the preceding year or the last March that occurred before the current date.

Original Investment

The initial amount of money invested in a financial venture or asset.

Interest Rate

The specific rate at which interest is incurred on borrowed cash from a lender to a borrower.