In the Real-World Banking System,a Bank Can Eliminate a Reserve

question 329

Multiple Choice

In the real-world banking system,a bank can eliminate a reserve deficiency by

• A)borrowing in the Federal funds market.
• B)borrowing from the Fed's discount window.
• C)selling securities.
• D)Any one of the choices or some combination is possible.

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Definitions:

Total Liabilities

The sum of all financial obligations a company has to external parties, including both short-term and long-term debts.

Accounting Equation

The fundamental formula in accounting that states assets equal liabilities plus equity (Assets = Liabilities + Equity).

Owner's Equity

The net worth of an owner in a company, calculated as the difference between the company's assets and liabilities.

Liabilities

Financial obligations or debts of a business that are due to be paid to creditors in the future.