Why are banks susceptible to potential bank runs? Group of answer choices Banks make many conservative loans at high interest rates, but pay low interest rates to depositors. Banks have short business hours and customers have difficulty accessing their funds after hours. Banks that are not competitive compared to others. Banks keep only fractional funds available, a much higher customer demand to withdraw funds in a short period of time may generate customer panic.

Why are banks susceptible to potential bank runs? Group of answer choices Banks make many conservative loans at high interest rates, but pay low interest rates to depositors. Banks have short business hours and customers have difficulty accessing their funds after hours. Banks that are not competitive compared to others. Banks keep only fractional funds available, a much higher customer demand to withdraw funds in a short period of time may generate customer panic.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter14: Money And The Federal Reserve System

Section: Chapter Questions

Problem 15SQ

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Similar questions

A system of deposit insurance attracts risk-taking entrepreneurs into the banking industry. increases the likelihood of bank runs. increases the incentives of depositors to monitor the riskiness of their bank's asset portfolio. encourages bank managers to decrease risk.
Banks are illiquid because their: Group of answer choices liabilities are greater than their assets. deposits are less liquid than their loans. assets are greater than their liabilities. loans are less liquid than their deposits.
When a commercial bank borrows from the Federal Reserve, it pays the ________ rate, whereas if it borrows from another commercial bank it pays the ________ rate. Group of answer choices prime; federal funds federal funds; discount discount; federal funds interest; discount
A bank has outstanding loans of $7,500, reserves of $2,500, and deposit liabilities of $10,000. If the required reserve ratio is 10%, this bank: A. Is holding excess reserves of $1,000 B. Is in a position to make a new loan for $1,500 C. Is in a position to make a new loan for $2,500 D. Has less reserves than required
Dollar Bank is currently loaned up. If the required reserve ratio is lowered, Group of answer choices Dollar Bank will still be loaned up because it did not receive any additional deposits. Dollar Bank's actual reserves will increase, but it will still be loaned up. Dollar Bank's net worth will increase. Dollar Bank will have excess reserves that it can lend out.
Banks that are too-big-to-fail refers to: a. Banks with multiple branches and a large number of depositors. b. Banks that are viewed by regulators as being too big to be closed and liquidated without imposing a systemic risk to the banking and financial system. c. Banks that are too profitable to declare bankruptcy. d. Any financial institution that accepts deposits from the general public.
Banks are naturally unstable because they have ______________ liabilities, but __________________ assets. Group of answer choices a. long term; short term b. high; low c. short term; long term d. low; high
"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?
Which of the following describe a common cause of bank panics? Check all that apply. Potential buyers of the assets of a bank, incorrectly rumored to be distressed, may suspect the assets to be of poor quality. Bank regulators are bureaucrats who do not keep up with real-world banking issues. A run on a given bank is often contagious and spreads to other financial institutions.
If the required reserve ratio is 10 percent and a bank receives a new deposit of $100, this bank: A. Must increase required reserves by $10 B. Will be able to make new loans up to a maximum of $90 C. Will initially see its total reserves increase by $100 D. All of the above are correct
If a bank currently has $10,000 Excess Reserves, $20,000 Required Reserves, and $30,000 Actual Reserves. What is the maximum amount of loans the bank could make? Multiple Choice $30,000 - up to its Actual Reserves $20,000 - up to its Required Reserves $10,000 - up to its Excess Reserves Under the above conditions, the bank could not make any additional loans
Banks hold reserves in order to: cover their customers' withdrawal needs. cover the banks' investments. offset their liabilities. satisfy stockholders.