A bank can increase its level of reserves by
A) selling securities.
B) increasing borrowings.
C) calling loans.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the options listed are methods by which a bank can increase its level of reserves. Selling securities converts assets into cash, increasing reserves. Increasing borrowings, especially from central banks or other financial institutions, directly increases the bank's reserves. Calling in loans, or demanding early repayment, also increases reserves as the money paid back by borrowers becomes immediately available to the bank.

A Bank Can Increase Its Level of Reserves by