Commercial banks that go to the discount rate window to borroe funds from the Federal Reserve, may     a. not be able to borrow funds from other bank based on the Fed Funds rate     b. needs to pay a penalty rate to borrow from the Federal Reserve     c. may need that their internal balances and accounts be scrutinized by the Federal Reserve    d. All of the above

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Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.