_____ consist(s) of deposits at the Fed plus currency that is physically held by

Question

_____ consist(s) of deposits at the Fed plus currency that is physically held by banks and _____ are regulations making it obligatory for depository institutions to keep a certain fraction of their deposits as reserves with the Fed.

Reserves; reserve requirement

Nominal anchor; price stability

Required reserves; excess reserves

Open market operations; discount window

Reserves; reserve requirement

Nominal anchor; price stability

Required reserves; excess reserves

Open market operations; discount window

Explanation / Answer

Solution:

The answer is 'a'.

Reserves consists of deposits at the fed plus currency that is physically held by banks and reserve requirement are regulations making it obligatory for depository institutions to keep a certain fraction of their deposits as reserves with the Fed.

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