Question

How does the Federal Reserve utilize reserve requirements?(1 point)

Responses

Reserve requirements are set by the Fed to regulate retirement portfolios for federal workers.
Reserve requirements are set by the Fed to regulate retirement portfolios for federal workers.

Reserve requirements are set by the Fed to regulate the minimum amount that a commercial bank must hold in liquid assets.
Reserve requirements are set by the Fed to regulate the minimum amount that a commercial bank must hold in liquid assets.

Reserve requirements are set by the Fed to balance the nation’s budget.
Reserve requirements are set by the Fed to balance the nation’s budget.

Reserve requirements are set by the Fed to encourage saving and investing by consumers and businesses.

Answer 1

[AI-generated answer — Bot GPT 3.5]

Reserve requirements are set by the Fed to regulate the minimum amount that a commercial bank must hold in liquid assets. By setting reserve requirements, the Fed ensures that banks have enough reserves to meet their deposit liabilities and can maintain stability in the banking system.