Question

If a bank needs reserves for a short period due to slipping below requirements, it can obtain these reserves by

	a.	borrowing from the Federal Reserve.
	b.	using the Federal Funds Market.
	c.	issuing a repurchase agreement.
	d.	selling one of their short-term bonds on the secondary market.
	e.	all of the above.

Answer 1

Answer

Option e) All of the above.

Reason: The sources mentioned are all the available sources for a bank to borrow for a short period:

For example-

Federal Reserve funds are overnight loans banks use to meet the reserve requirement at the end of each day.

A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price.