If excess reserves are too large,a bank is likely to

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Quizplus · Accepted Answer

If excess reserves are too large, the bank is likely to buy government securities to lend out the excess reserves and earn interest. This can help stimulate the economy by increasing the amount of money available in circulation. Borrowing in the federal funds market or from the discount window may still be an option for the bank, but buying government securities is the best choice to utilize excess reserves.

If Excess Reserves Are Too Large,a Bank Is Likely to