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.

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Definitions:

Semicircular Canals

Semicircular canals are three fluid-filled tubes located in the inner ear that play a key role in maintaining balance and spatial orientation by detecting rotations of the head.

Nociceptors

Sensory receptors that send signals to the brain in response to potentially harmful stimuli, causing the perception of pain.

Endorphins

Natural chemicals produced in the brain that act as painkillers and mood enhancers, often released in response to stress or physical activity.

Olfactory Receptors

Olfactory receptors are specialized nerve cells responsible for detecting odors and initiating the sense of smell.