Because depository institutions earn no interest on reserves:
A)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when reserve requirements are low, this motivation is especially strong.
B)profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong.
C)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong.
D)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong.
E)none of the above

Question

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The Answer of Because depository institutions earn no interest on reserves:
A)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when reserve requirements are low, this motivation is especially strong.
B)profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong.
C)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong.
D)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong.
E)none of the above

Because Depository Institutions Earn No Interest on Reserves