A chartered bank that is temporarily short in the level of reserves it wishes to hold will borrow from another chartered bank:
A)overnight.
B)over a week.
C)for a month.
D)for six months.

Question

Quizplus · Accepted Answer

When a chartered bank is temporarily short in the level of reserves it wishes to hold, it is most likely to borrow from another chartered bank overnight. This is because the need for reserves in the banking system is often short-term and overnight borrowing is a common practice for banks to meet their reserve requirements. Borrowing for longer periods of time, such as over a week or six months, may not be necessary and can incur higher costs for the borrowing bank.

A Chartered Bank That Is Temporarily Short in the Level