If,after a Deposit Outflow,a Bank Needs an Additional $3 Million

question 76

Multiple Choice

If,after a deposit outflow,a bank needs an additional $3 million to meet its reserve requirements,the bank can

• A)reduce deposits by $3 million.
• B)increase loans by $3 million.
• C)sell $3 million of securities that the bank currently owns.
• D)repay its discount loans from the Fed.

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Definitions:

Limited Time

A restricted period designated for a specific purpose or event.

Common Stockholders

Individuals or entities that own common shares in a corporation, entitling them to vote and share in the profits.

Preferred Stockholders

Individuals or entities that own preferred shares in a company, granting them certain advantages over common stockholders, such as priority in dividend payments and assets during liquidation.

Market Price

The current price at which an asset or service is bought or sold in the open market.