If a Bank Has Negative Excess Reserves

question 102

Multiple Choice

If a bank has negative excess reserves,

• A)it is bankrupt.
• B)its required reserves are greater than its actual reserves.
• C)it must stop making loans.
• D)it must raise the interest rates it is charging borrowers.

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Definitions:

Spearman Rank Correlation

An unparametric method for determining rank correlation that evaluates the extent to which two variables' relationship can be characterized by a monotonic function.

Ordinal Variables

Variables that represent categories with a natural order but which do not have a fixed interval between values, allowing for ranking but not quantifiable difference measurement.

Interval Variables

Variables that have meaningful distances between measurements but do not have a true zero point, allowing for both positive and negative values.

Normality Requirement

The assumption that the data or residuals in certain statistical models follow a normal distribution, required for the validity of many tests.