A Bank That Does Not Want to Hold a Lot

question 52

Multiple Choice

A bank that does not want to hold a lot of excess reserves but wants to manage liquidity risk is likely to:

• A) hold a lot in highly liquid securities.
• B) make sure that most of its assets are in small business loans.
• C) have a high ratio of loans to securities.
• D) limit withdrawals by customers.

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Definitions:

Unemployment

Unemployment refers to the situation when individuals who are able and willing to work cannot find employment.

Price Level

The median price level of all goods and services currently offered in the economy.

Previous Year

The 12-month period immediately before the current year, used as a reference point for comparing data or statistical analysis.

Unemployment

The situation where individuals who are willing and able to work are not currently employed.