Which of the Following Explains Why a Bank Holds Reserves

question 443

Multiple Choice

Which of the following explains why a bank holds reserves?
I. Banks are required by law to hold reserves.
II. To meet depositors' currency withdrawals
III. To use them to make loans to households

• A) I only
• B) II only
• C) I and II
• D) I, II, and III
• E) I and III

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Definitions:

Discount Period

The time frame between the start date of a sale and its expiration, during which goods or services are offered at reduced prices.

Purchase Allowances

A reduction in the purchase price, allowed by the seller to the buyer, often due to minor defects or quality issues in the goods.

Buyer Acquires

The process where a buyer takes possession or ownership of goods or property from a seller.

Quick Assets

Liquid assets that can be quickly converted into cash without significantly affecting their value, such as marketable securities and accounts receivable.