How Do Deposits and Reserves Appear on a Bank's T-Account

question 21

Multiple Choice

How do deposits and reserves appear on a bank's T-account?

• A) Both deposits and reserves are assets.
• B) Both deposits and reserves are liabilities.
• C) Deposits are assets, and reserves are liabilities.
• D) Reserves are assets, and deposits are liabilities.

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Definitions:

Commercial Banks

Financial institutions that accept deposits, offer checking and savings accounts, and provide loans, thereby playing a crucial role in the financial system.

Central Bank

Is the primary financial institution of a country, responsible for issuing currency, managing the money supply, regulating banks, and implementing monetary policy to achieve economic stability.

Foreign Exchange Rate

The price at which one currency can be exchanged for another currency in the foreign exchange market.

World Market

The global marketplace where goods, services, and financial products are bought and sold across borders.