One Reason Why Banks Are Required to Deposit a Minimum

question 93

Multiple Choice

One reason why banks are required to deposit a minimum amount of reserves at the Federal Reserve is so that

• A) banks will have more liquidity.
• B) banks will be able to make more loans.
• C) depositors will feel their deposits are protected.
• D) the Federal Reserve can own a portion of all banks they regulate.
• E) the Federal Reserve can control the ability of banks to lend money to others.

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Definitions:

Bank Service Charges

Fees charged by banks for the use of their services, such as account maintenance fees, transaction fees, and overdraft charges.

Outstanding Cheques

Checks that have been written and recorded by a company but have not yet been cleared or deducted from the bank account balance.

Bank Reconciliation

This is a process of matching and comparing an organization's financial records with the bank statements to ensure consistency and accuracy.

Deposits In Transit

Funds that have been recorded by a company but not yet by its bank, typically because the deposit was made after the bank's cutoff time.