Banks make additional loans when desired reserves
A) are less than actual reserves, a situation of negative excess reserves.
B) are less than actual reserves, a situation of positive excess reserves.
C) exceed actual reserves, a situation of negative excess reserves.
D) exceed actual reserves, a situation of positive excess reserves.

Question

Quizplus · Accepted Answer

Banks make additional loans when they have positive excess reserves, meaning their actual reserves exceed the desired reserves. This allows them to lend out the excess amount.

Banks Make Additional Loans When Desired Reserves