[Answer] Which increases the excess reserves of commercial banks?

Answer: The central banks buy bonds from commercial banks

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Which increases the excess reserves of commercial banks? Excess reserves of the banking system will decrease. The commercial banking system has excess reserves of $200 000 . Then new loans of $800 000 are subsequently made and the system ends up just meeting its reserve requirements. There is a decrease in the size of commercial banks' excess reserves the money supply decreases and the interest rates rise thereby causing a decrease in investment spending and real GDP An increase in the money supply ceteris paribus usually: Suddenly and for the first time in history banks had an incentive to hold excess reserves at the Federal Reserve . Excess reserves hit a record $ 2.7 trillion in August 2014 due to the ... Start studying chapter 25 - Test 3. Learn v...

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