Whenever a bank's actual reserves exceed its desired reserves, the bank
A) can lend out additional funds.
B) needs to call in loans.
C) will go out of business.
D) must increase the amount of its required reserves by obtaining more cash.

Question

Quizplus · Accepted Answer

When a bank's actual reserves exceed its desired reserves, it means the bank has excess reserves. This allows the bank to lend out additional funds, as it has more reserves than it believes necessary to cover withdrawals and other obligations.

Whenever a Bank's Actual Reserves Exceed Its Desired Reserves, the Bank