Service

Big Bucks Bank currently holds 20 million in excess reserves If the Fed increases the rate of interest it pays on reserves held at the Fed we would expect Big Bucks Bank to use those excess

Big Bucks Bank currently holds 20 million in excess reserves If the Fed increases the rate of interest it pays on reserves held at the Fed we would expect Big Bucks Bank to use those excess

Big Bucks Bank currently holds $20 million in excess reserves. If the Fed increases the rate of interest it pays on reserves held at the Fed, we would expect Big Bucks Bank to:

-use those excess reserves to increase its lending.

-hold more of those excess reserves in its reserve account at the Fed, reducing the amount it is willing to lend.

-move a portion of those excess reserves into its required reserve account.

-not change its lending activity, as excess reserves are not eligible to receive interest paid on reserve accounts.

 
mahesh 17-Mar-2020

Answer (UnSolved)

question Get solution