When a Bank Has Excess Reserves

question 20

Multiple Choice

When a bank has excess reserves

• A) it can make loans.
• B) it can create money.
• C) it has too many loans.
• D) Both answers A and B are correct.

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Definitions:

Worksheet

A worksheet is often a piece of paper or a digital document used by accountants to prepare adjustments and end-of-period financial statements.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period of time, leading to its net income or loss.

Statement of Owner's Equity

A financial document showing the changes in the equity of a company over a specified period, including additions through earnings and subtractions due to withdrawals.

Debits

These represent transactions that increase assets or expenses or decrease liabilities, equity, or revenue in a company's accounts.