Big bucks bank currently holds 20 million in excess, Ask an Expert

Economics

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.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91952038

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