Banks would be expected to:
A. minimize holding excess reserves because the practice of holding more than the required reserves is illegal.
B. minimize holding excess reserves because the practice of holding more than the required reserves is not profitable.
C. maximize holding excess reserves because the practice of holding more than the required reserves increases the assets of the bank.
D. maximize holding excess reserves because the practice of holding more than the required reserves reduces the tax paid by the bank to the Federal Reserve.
Answer: B
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