Sweep Accounts

question 3

Multiple Choice

Sweep accounts

• A)have made reserve requirements nonbinding for many banks.
• B)sweep funds out of deposit accounts into long-term securities.
• C)enable banks to avoid paying interest to corporate customers.
• D)reduce banks' assets.

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Definitions:

Federal Reserve Bank of New York

One of the 12 Federal Reserve Banks in the United States, playing a key role in monetary policy, financial supervision, and economic research.

Board of Governors

The executive leadership of a central banking system, such as the Federal Reserve in the United States, responsible for setting monetary policies and overseeing affiliate banks.

Reserve Requirement Ratio

The fraction of deposits that banks are required to keep on hand, either in cash or as deposits at a central bank, as a measure to ensure bank liquidity.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by regulatory authorities.