A bank that has no excess reserves
A) cannot create loans.
B) is not in equilibrium.
C) is on the brink of bankruptcy.
D) has no required reserves.

Question

Quizplus · Accepted Answer

Excess reserves are the reserves held by the bank over and above the required reserves. If a bank has no excess reserves, it means it is only holding the required reserves and does not have any additional funds to lend out or create loans. Therefore, option A is the correct answer.

A Bank That Has No Excess Reserves