Banks Can Protect Themselves from the Disruption Caused by Deposit

question 68

Multiple Choice

Banks can protect themselves from the disruption caused by deposit outflows by

• A) holding excess reserves.
• B) selling securities.
• C) "calling in" loans.
• D) doing all of the above.
• E) doing only A and B of the above.

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Definitions:

Fixed Budget

A financial plan that does not change or fluctuate with the volume of business activity.

Standard Costs

Predetermined costs for the production of goods or services, used as benchmarks to measure actual performance and manage costs.

Actual Costs

Actual costs are the genuine expenditures incurred by a company, as opposed to estimated costs, during a given period for production, services, or other activities.

Reasonableness

A test or criterion to evaluate whether the assumptions or outputs of a financial model or decision are logical and align with real-world expectations.