An open-market purchase of government Bonds. Assume a simplified banking system subject to a 20 percent required-reserve ratio. B. 20 percent. C. 0.2 percent. D. 1 percent.
Banks hold few excess reserves because holding excess reserves is A. subject to taxation.
B. not profitable. C. against Fed policy. B. equal to its demand deposits. C. equal to its transactions deposits. D. none of the above.