If a bank has excess reserves greater than the amount of a deposit outflow,the outflow will result in equal reductions in
A)deposits and reserves.
B)deposits and loans.
C)capital and reserves.
D)capital and loans.

Question

Quizplus · Accepted Answer

Excess reserves are the reserves held by a bank in excess of the required reserve ratio. When there is a deposit outflow, the bank can use its excess reserves to cover the outflow. Thus, there will be equal reductions in both deposits and reserves.

If a Bank Has Excess Reserves Greater Than the Amount