An FI Has $5 Million in Cash Reserves with the Fed

question 68

Multiple Choice

An FI has $5 million in cash reserves with the Fed in excess of its reserve requirements,$5 million in T-Bills,and a credit line of $10 million to borrow in the repo market.It currently has lent $2 million in the Fed Funds market and borrowed $1 million from the Federal discount window to meet its seasonal needs.
What are the bank's current total uses of liquidity?

• A)$1 million.
• B)$3 million.
• C)$8 million.
• D)$10 million.

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Definitions:

Total Benefit

The complete value or advantage gained from consuming a good or service, encompassing both the direct and indirect benefits.

Additional Unit

Refers to the next unit of production or consumption beyond the current level.

Marginal Benefit

The additional satisfaction or utility that a person receives from consuming an extra unit of a good or service.

Marginal Cost

The cost increase resulting from the production of an extra unit of a product or service.