When a bank receives deposits,
A) it must hold the entire amount as reserves in case of withdrawal.
B) the Fed requires it to hold only a small percentage as reserves.
C) it and it alone decides how much it will hold as reserves.
D) its liabilities increase in amount but its assets do not change.
E) its assets increase in amount but its liabilities do not change.
B
You might also like to view...
In what way are other assets less liquid than money?
What will be an ideal response?
Refer to Figure 3.1. Which of the following is true concerning Alvin's marginal rate of substitution?
A) It is diminishing. B) It is positive but varies along the indifference curve. C) It is constant. D) It is zero.
Give examples of how government intervention helps reduce moral hazard and adverse selection problems in internal labor markets.
What will be an ideal response?
A commercial bank's checkable-deposit liabilities can be estimated by:
A. Dividing its required reserves by its excess reserves B. Dividing its required reserves by the reserve ratio C. Multiplying its required reserves by its excess reserves D. Multiplying its required reserves by the reserve ratio