Because Depository Institutions Earn No Interest on Reserves

question 49

Multiple Choice

Because depository institutions earn no interest on reserves:

• A)profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong.
• B)profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong.
• C)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong.
• D)profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong.
• E)none of the above

Identify the most widespread and influential type of formal organization.

Recognize the role of reference groups in shaping individual behavior.

Understand how the structure and size of organizations impact efficiency and employee satisfaction.

Explore strategies for increasing organizational efficiency and employee morale.