Banks Want to Minimize Their Holdings of Excess Reserves Because

question 189

Multiple Choice

Banks want to minimize their holdings of excess reserves because

• A)they will be penalized by the Federal Reserve System if excess reserves are too high
• B)required reserves will also be minimized
• C)the money multiplier will be larger leading to a greater money supply
• D)they want to borrow more on the federal funds market
• E)excess reserves earn no interest

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