9 June 2010
Which of the following most accurately describes what banks do with their excess reserves?
Posted by admin under: Economics .
Which of the following most accurately describes what banks do with their excess reserves?
A. Banks keep excess reserves on hand to meet customer’s demands for withdrawals during a bank run.
B. Banks invest excess reserves in the currency exchange market in order to stabilize their nation’s currency.
C. Banks use excess reserves to make loans to customers so that they can make profits on the interest.
D. Banks spend excess reserves on expenses such as rent and salaries that are related to operating the bank.
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One Comment so far...
Oladejo S Says:
11 June 2010 at 3:17 pm.
The correct answer should be option C.
Excess reserves are used to make loans to their customers so that they can make profits on the interest.