Which of the following statements is true of the liquidity of banks?
A) The more cash banks loan to customers, the lower its profits but the higher its liquidity.
B) Banks face liquidity problems because they borrow long and lend short.
C) The more cash a bank keeps in securities, the higher its liquidity and the lower its profits.
D) In order to increase their liquidity, banks need to purchase government bonds from the
Correct Answer:
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