If a Bank Has Zero Excess Reserves and One of Its

question 149

Multiple Choice

If a bank has zero excess reserves and one of its creditworthy customers applies for a loan,the bank may be able to grant the loan if it can

• A) apply some of its loan repayments to obtain the funds for the new loan.
• B) obtain extra funds in the federal funds market.
• C) obtain extra funds by borrowing from the Fed.
• D) any of the above
• E) b or c

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Definitions:

Socioeconomic Character

Refers to the social and economic attributes that define the status or characteristics of individuals or groups within a society.

Duty of Loyalty

A legal obligation of fiduciaries, such as company directors and trustees, to act in the best interest of the entity or person they represent.

Actual Financial Loss

A monetary loss that can be quantified or accurately measured, resulting from specific events like theft or litigation.

Negligent

Describes a failure to exercise the care that a reasonably prudent person would exercise in like circumstances, leading to unintended damage or harm.