If a Bank Has Zero Excess Reserves and One of Its

question 149

Multiple Choice

If a bank has zero excess reserves and one of its creditworthy customers applies for a loan,the bank may be able to grant the loan if it can

• A) apply some of its loan repayments to obtain the funds for the new loan.
• B) obtain extra funds in the federal funds market.
• C) obtain extra funds by borrowing from the Fed.
• D) any of the above
• E) b or c

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Definitions:

Retirement Savings Contributions Credit

A tax credit offered to lower-income individuals to encourage retirement savings, reducing tax liability for eligible contributions to retirement accounts.

Modified AGI

Adjusted Gross Income after adding back certain deductions, used to determine eligibility for certain tax benefits.

Qualified Retirement Plan

A retirement savings plan recognized by the IRS that offers tax benefits, such as deferral of income taxes on contributions and earnings.

Contributed

Refers to the act of providing or donating resources, such as money, time, or assets, towards a specific cause, project, or investment.