When a check is drawn and cleared, the
A) reserves and deposits of both the bank against which the check is cleared and the bank receiving the check are unchanged by this transaction.
B) bank against which the check is cleared loses reserves and deposits equal to the amount of the check.
C) bank receiving the check loses reserves and deposits equal to the amount of the check.
D) bank against which the check is cleared acquires reserves and deposits equal to the amount of the check.

Question

Quizplus · Accepted Answer

When a check is cleared, the bank against which the check is drawn loses reserves and deposits equal to the amount of the check. This is because the bank has to transfer funds from the account of the check writer to the account of the recipient of the check, reducing the amount of reserves and deposits held by the bank. The reserves and deposits of the bank receiving the check are unchanged by this transaction.

When a Check Is Drawn and Cleared, the