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A commercial bank's reserves are.... A. bonds issued by the U.S. government that are very safe....

A commercial bank's reserves are....

A. bonds issued by the U.S. government that are very safe.

B. the provision of funds to businesses and individuals.

C. savings and time deposits.

D. currency in its vault plus the balance on its reserve account at a Federal Reserve Bank.

E. its loans.

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Answer #1

The correct option is D). currency in its vault plus the balance on its reserve account at a Federal Reserve Bank.

Bank reserves are a commercial bank's cash holdings, that are physically held by the bank, and deposits held in the bank's account with the central bank. Such sums are usually termed required reserves, and any funds above the required amount are called excess reserves.

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