Question

Suppose the required reserves of the Right Bank in 2016 amounted to​ $1,000. Then​ $1,000 will?

▼

be an asset

be a liability

on the​ Fed's balance sheet and it will?

▼

be an asset

be a liablility

on the Right​ Bank's balance sheet.

Answer 1

Reserve requirement of the Other Bank in the federal balance sheet would be liability for the Federal Reserve. It will be returned to the bank in different situations.

so it would be liability for Federal Reserve as well.

Correct answer option ( B) it will be a liability.

2.Reserve in the banks case is always a liability because it is the deposited money and bank is going to repay it.

Hence it cannot be termed as asset. Correct answer is option( B) it will be a liability for the commercial banks