Table 13-4

-In Table 13-4,the Bank of Wealth could

Question

Table 13-4
 
-In Table 13-4,the Bank of Wealth could

Quizplus · Accepted Answer

Excess reserves are the funds that banks hold in excess of the required reserve ratio. Banks can use these excess reserves to make more loans or buy government securities to earn more profits. Therefore, the Bank of Wealth can use its excess reserves to make more loans or buy government securities. Option B is incorrect because excess reserves cannot directly decrease liabilities. Option C is also incorrect because banks need to maintain a certain level of reserves as per the reserve ratio requirements. Option D is incorrect because the bank can change its asset portfolio by using its excess reserves to make more loans or buy government securities.

Table 13-4 -In Table 13-4,the Bank of Wealth Could