Which of the Following Is a Reason Why a Bank

question 68

Multiple Choice

Which of the following is a reason why a bank may hold excess reserves?

• A) It earns more interest on reserves than on loans.
• B) It is required to do so.
• C) It may want flexibility to increase its loans if interest rates rise in the near future.
• D) Banks often expect a drop in the required reserve ratio.
• E) Banks often expect a rise in the required reserve ratio.

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