A bank with insufficient reserves can increase its reserves by
A)lending federal funds.
B)calling in loans.
C)buying short-term Treasury securities.
D)buying municipal bonds.

Question

Quizplus · Accepted Answer

Calling in loans increases a bank's reserves because it converts loans (assets that are not liquid) into cash, which directly boosts the bank's reserves. Other options either do not directly affect reserves or, in the case of lending federal funds, would actually decrease reserves.

A Bank with Insufficient Reserves Can Increase Its Reserves by