As the costs associated with deposit outflows ________,the banks willingness to hold excess reserves will ________.
A)decrease;increase
B)increase;decrease
C)increase;increase
D)decrease;not be affected

Question

Quizplus · Accepted Answer

When the costs associated with deposit outflows increase, banks face higher risks and uncertainties, leading them to hold more excess reserves as a precaution. This increases their willingness to hold excess reserves for liquidity purposes and to mitigate potential risks.

As the Costs Associated with Deposit Outflows ________,The Banks Willingness