Bankers' Concerns Regarding the Optimal Mix of Excess Reserves,secondary Reserves,borrowings

question 25

Multiple Choice

Bankers' concerns regarding the optimal mix of excess reserves,secondary reserves,borrowings from the Fed,and borrowings from other banks to deal with deposit outflows is an example of

• A)liability management.
• B)liquidity management.
• C)managing interest rate risk.
• D)managing credit risk.

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Definitions:

Fixed Capital

Long-term assets used in the production of goods and services, such as buildings, machinery, and equipment.

Variable Labor

Labour costs that vary directly with the level of production or output in a business.

Average Variable Cost

The cost per unit of output that varies with the level of production, excluding fixed costs.

Average Total Cost

The sum of average variable costs and average fixed costs (costs that do not change with the level of output) divided by the quantity of output, representing the total cost per unit of output.