What Effect Does a Bank's Decision to Hold Excess Reserves

question 142

Multiple Choice

What effect does a bank's decision to hold excess reserves have on its balance sheet?

• A) Assets would decrease; there would be no change to liabilities.
• B) There would be no change to assets; liabilities would decrease.
• C) Assets would increase; there would be no change to liabilities.
• D) There would be no change to assets or liabilities.
• E) Assets and liabilities would both decrease.

---

Definitions:

Relay Valve

A valve used in air brake systems that speeds up the application and release of brakes over long distances by shortening the response time.

Primary Circuit

The initial or main electrical circuit in a system, responsible for providing the primary flow of electricity or the initial path for the current.

Secondary Circuit

An auxiliary or supplementary electrical circuit that operates alongside or in addition to the main circuit, often for distinct or specialized tasks.

Primary Circuit

The initial or main circuit in an electrical system, responsible for carrying the primary source of electricity or signal.