Excess Reserves Are Put to Use by a Bank When

question 145

Multiple Choice

Excess reserves are put to use by a bank when it

• A)puts cash in the vault to back existing loans.
• B)pays off the mortgage on its building.
• C)sells government securities.
• D)makes loans to its customers.

---

Definitions:

Insurance

A risk management tool that provides financial protection against loss or harm in exchange for premium payments.

Taxes

Compulsory financial charges or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Independent Demand

The need for a product or component that is not influenced by the demand for other items in inventory.

Inventory Investment

The capital allocated to purchase and hold inventory, which includes raw materials, work-in-process, and finished goods.