Banks Try to Keep Their Level of Excess Reserves Low

question 143

Multiple Choice

Banks try to keep their level of excess reserves low because

• A)the Fed charges a penalty for holdings of excess reserves.
• B)they are concerned that the money multiplier will become too large.
• C)they wish to maximize profits.
• D)bank regulators levy fines on the amount of excess reserves.

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Intangible Assets

Intangible assets are non-physical assets owned by a business, such as patents, trademarks, goodwill, and licensing agreements, known for their long-term value.

Long-Term Debt

Loans and financial obligations lasting over one year that are used to finance a company's operations.

Book Value

The value of an asset according to its balance sheet account balance, subtracting any liabilities or depreciation.