If Stored Liquidity Is Used by a DI to Fund

question 10

Multiple Choice

If stored liquidity is used by a DI to fund an exercised loan commitment

• A)the balance sheet will decrease by the amount of the new loan.
• B)only the asset side of the balance sheet will increase.
• C)the balance sheet will increase by the amount of the new loan.
• D)only the liability side of the balance sheet will increase.
• E)there will be no effect on the balance sheet.

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Definitions:

Tongue Depressors

Tool used in medical practice to hold down the tongue to examine the mouth and throat.

Total Revenue

The total income received by a firm from selling its goods or services before any costs or expenses are deducted.

Elastic

Describing a situation in which the supply or demand for a good or service is highly responsive to changes in price.

Elasticity Coefficient

A measure reflecting the responsiveness of the quantity demanded or supplied of a good to a change in its price.