Because Depository Institutions Are Profit Driven, Excess Reserves Are Used

question 106

Multiple Choice

Because depository institutions are profit driven, excess reserves are used to acquire

• A)liabilities.
• B)required reserves.
• C)assets.
• D)checkable deposits.

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Definitions:

Loan Repay

Loan repayment is the act of paying back borrowed funds to the lender, typically in installments that include both principal and interest.

Notes Payable

Financial obligations represented by written promissory notes requiring the borrower to repay the amount borrowed plus interest.

Accounts Payable

Liabilities or money owed by a business to its creditors or suppliers for goods and services received.

Non-interest Bearing

Refers to debt or a financial instrument that does not accrue interest over time, meaning the borrower only repays the principal amount.