When a $10 check written on the First National Bank of Chicago is deposited in an account at Citibank,then
A)the liabilities of the First National Bank decrease by $10.
B)the reserves of the First National Bank increase by $10.
C)the liabilities of Citibank decrease by $10.
D)the assets of Citibank decrease by $10.

Question

Quizplus · Accepted Answer

When the check is deposited, the First National Bank of Chicago must transfer $10 from its reserves to Citibank, effectively reducing its liabilities because a check is a demand on the bank's liabilities.

When a $10 Check Written on the First National Bank