A bank borrows $100,000 from the Fed, leaving a $100,000 Treasury bond on deposit with the Fed
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A bank borrows $100,000 from the Fed, leaving a $100,000 Treasury bond on deposit with the Fed to serve as collateral for the loan. The discount rate that applies to the loan is 4 percent, and the Fed is currently mandating a reserve ratio of 10 percent.
How much of the $100,000 borrowed by the bank must it keep as required reserves?
a. $0
b. $4,000
c. $10,000
d. $100,000
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Related Book For
Macroeconomics
ISBN: 9781264112456
22nd Edition
Authors: Campbell McConnell, Stanley Brue, Sean Flynn
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