Banks Hold Reserves

question 10

Multiple Choice

Banks hold reserves

• A) to earn interest.
• B) to increase profits.
• C) to escape the double coincidence of wants.
• D) to meet depositor withdrawals and payments.
• E) only because the government requires them to hold reserves.

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Definitions:

Short-term Notes Payable

Debt obligations that are due to be paid within a year, often used for working capital purposes or to finance short-term liabilities.

Interest Charges

Costs incurred for borrowing money, calculated as a percentage of the principal amount loaned.

Account Payable

An obligation of a company to pay a short-term debt to its creditors or suppliers.

Deductions

Amounts subtracted from gross income or revenue to calculate net income or taxable income, including expenses, allowances, and discounts.