What Effect Does a Bank's Decision to Hold Excess Reserves

question 1

Multiple Choice

What effect does a bank's decision to hold excess reserves have on a bank's balance sheet?

• A) Assets would decrease; there would be no change to liabilities.
• B) There would be no change to assets; liabilities would decrease.
• C) Assets would increase; there would be no change to liabilities.
• D) There would be no change to assets or liabilities.
• E) Assets and liabilities would both decrease.

---

Definitions:

Calendar (Rhythm) Method

A form of natural contraception that involves tracking the menstrual cycle to determine fertile and infertile days.

Menstrual Cycles

The monthly cycle of changes in the ovaries and the lining of the uterus (endometrium), starting with the preparation of an egg for fertilization.

Rhythm Method

A form of natural family planning based on tracking the menstrual cycle to estimate fertile and infertile periods.

Menstrual Cycle

The regular, natural change that occurs in the female reproductive system that makes pregnancy possible, typically lasting about 28 days.