On the Books of the Fed the Difference Between Borrowed

question 13

Multiple Choice

On the books of the Fed the difference between borrowed reserves and discount loans is equal to

• A)excess reserves.
• B)required reserves.
• C)currency in circulation.
• D)zero; they are the same thing.

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Definitions:

Equity

Equity represents the value of an owner's interest in a property or business, after deducting liabilities.

Compensating Balance

A minimum bank account balance that a borrower agrees to maintain with a lender as part of the terms of a loan.

Rate of Interest

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.

Equity Financing

The method of raising capital through the sale of shares in a company, thereby granting shareholders ownership interests.