An FI Can Manage a Drain on Deposits or an Exercise

question 32

True/False

An FI can manage a drain on deposits or an exercise of a loan commitment in two major ways, these being purchased liquidity management and stored liquidity management.

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Definitions:

Price Inelastic

Describes a situation where the demand for a product does not change significantly when its price changes.

Tax Revenue

The financial earnings governments receive via taxing.

Perfectly Price Inelastic

A situation where the quantity demanded of a good or service does not change in response to a change in price.

Consumption

The use of goods and services by households.