Secondary Reserves Are So Called Because

question 49

Multiple Choice

Secondary reserves are so called because

• A)they can be converted into cash with low transactions costs.
• B)they are not easily converted into cash,and are,therefore,of secondary importance to banking firms.
• C)50% of these assets count toward meeting required reserves.
• D)they rank second to bank vault cash in importance of bank holdings.

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Definitions:

Government Revenues

The income received by the government from taxes and non-tax sources used to fund public services and expenditures.

Interest Rates

The rate at which a borrower is charged interest for borrowing money from a lender.

Federal Budget Deficits

The financial situation where the U.S. government's expenditures exceed its revenue in a given fiscal year.

Trade Deficits

Trade deficits occur when a country imports more goods and services than it exports, resulting in a net outflow of domestic currency to foreign markets.