Question

11. Banks subject to reserve requirements set by the Federal Reserve System include A) only state-chartered banks. B) only nationally chartered banks. C) only banks with less than $100 million in assets. D) only banks with less than $500 million in assets. E) all banks whether or not they are members of the Federal Reserve System

Answer 1

Answer: E) all banks whether or not they are members of the Federal Reserve System

Explanation:

The Federal Reserve System requires that all banks regardless of their membership or lack thereof of the FED adhere to the reserve requirements it has established.

The Reserve Requirements are very essentially to the economy as they help control liquidity as well as protect both banks and it's customers from Bank Runs (customers withdrawing their money in massive numbers because they fear for the future of the bank).

Recently though, the FED has reduced this requirement to ZERO to enable banks borrow out more funds amidst Coronavirus concerns.