Principles of Macroeconomics / Unit 11 MAC 1012 short lesson, about 20 seconds
Required and Excess Reserves
Captions available
The idea
Reserves are funds a bank holds rather than lends. Required reserves are what a rule obliges it to hold; excess reserves are anything above that. Together they are total reserves.
In practice
A bank holding exactly its requirement is described as loaned up.
Where people slip
Excess reserves are the only funds a bank can lend, not the whole new deposit.
Your place on the trail
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