Question

You have just begun a new job as a bank teller at Santa's Elf Bank. Your supervisor asks you what the difference is between reserves and excess reserves in terms of banking. You want to impress your supervisor, so you recall what you learned in your economics course in order to form your response. What is the difference between reserves and excess reserves in terms of banking

Answer 1

Answer:

Excess reserves refer to the reserves that the banks have beyond the legally required reserve amounts. Reserves are the funds banks keep on hand to meet Federal Reserve requirements.

Explanation:

Answer 2

The financial institutions are the institutes comprising of the economic transactions and maintaining the surplus and deficit in the economy. It is the intermediate banking institution that lends and deposits the money to the customers and from the customers.

The difference between the reserves and the excess reserves:

Bank reserves are termed as the left amount of the cash that is kept by the bank to cover the situation of unexpected demand of the cash in the institute. The excess reserves are the amount of additional cash that has been kept with the bank in hand and declines to loan out as the amount is declared as the bank's cash in hand.

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