Which of the Following Explains Why Banks Try to Keep

question 119

Multiple Choice

Which of the following explains why banks try to keep their holdings of excess reserves low?

• A)To maximize profits.
• B)To keep the money multiplier low.
• C)To escape Fed penalties.
• D)To please bank examiners.

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Definitions:

Producer Surplus

The difference between the actual amount received by sellers for a product and the least amount they would be willing to accept, representing the net benefit to producers.

Excess Supply

Occurs when the quantity of a good or service supplied is greater than the quantity demanded, often leading to a decrease in price.

Minimum Wage

The lowest legal salary that employers can pay their workers, established by government laws.

Labor Market

A marketplace where wages are determined, and workers are hired and fired.