If many banks fail, this is likely to:
A)cause surviving banks to lower their ratios of reserves to deposits.
B)cause surviving banks to raise their ratios of reserves to deposits. have
C)no effect on the ratios of reserves to deposits in surviving banks.
D)cause surviving banks to hold less currency.

Question

Quizplus · Accepted Answer

When many banks fail, surviving banks may become more risk-averse and increase their ratios of reserves to deposits in order to protect themselves from potential losses.

If Many Banks Fail, This Is Likely To