Banks That Need Additional Funds to Meet the Reserve Requirements

question 96

Multiple Choice

Banks that need additional funds to meet the reserve requirements of the Federal Reserve:

• A)borrow from the state government of the state where their headquarters are located.
• B)borrow from banks with excess reserves.
• C)issue treasury bills to investors.
• D)decrease the coupon interest rate on the bonds issued to raise funds.
• E)exercise the call option on the loans extended to small businesses.

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Definitions:

Partially Written

Describes a document or agreement that is composed of both handwritten and typed or printed elements.

Majority Rule

Majority rule is a decision-making principle whereby the choice of the greater number of participants in a group is accepted as the decision for the whole group.

One-Year Provision

A legal principle stating certain contracts must be in writing if they cannot be performed within one year of their making.

Main Purpose Doctrine

A legal principle that suggests a promise to pay another's debt is not subject to the statute of frauds if the guarantor's main purpose is to serve their own interests.