A Bank Can Make Loans When

question 165

Multiple Choice

A bank can make loans when

• A) excess reserves are greater than zero.
• B) excess reserves are equal to zero.
• C) excess reserves are less than zero.
• D) required reserves are greater than excess reserves.
• E) required reserves are less than excess reserves.

---

Definitions:

Bonds Payable

A long-term debt instrument issued by a company to investors, representing the amount it is obligated to pay back with interest.

Fair Value

A market-based measurement that reflects the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties.

Pre-Tax Profit

The profit earned by a business before any tax is deducted.

Intercompany Sales

Transactions of goods or services between divisions or subsidiaries within the same parent company.