Banks Have an Incentive to

question 98

Multiple Choice

Banks have an incentive to

• A)minimize excess reserves because the bank has to pay a fee to the Bank of Canada for holding excess reserves.
• B)minimize excess reserves because reserves produce no income.
• C)hold substantial excess reserves in case there is an unexpectedly heavy demand for withdrawals.
• D)hold substantial excess reserves because the bank's profits come from excess reserves.

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Definitions:

REM Sleep

A stage of sleep characterized by rapid eye movement, increased brain activity, and vivid dreams.

Night Terror

A sleep disorder causing feelings of panic or dread, typically occurring during non-REM sleep and often unremembered.

REM Sleep

A phase of sleep characterized by rapid eye movements and brain activity similar to being awake, often associated with vivid dreaming.

Nightmare

A disturbing dream associated with negative feelings, such as fear or horror, which can awake a person.