Question

A banks largest liability is: O its short term borrowing from other financial institutions. its long-term debt. O the deposi
Liquidity is defined as the ease with which a given asset can be converted to a: store of value O unit of account. medium of
Suppose you have deposited $5000 currency into your savings account at a branch of MBC bank. If the reserve ratio for this co
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Answer #1

1.

C

It is the depositors' deposits that is the largest liability for the banks.

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2.

C

It is the medium of exchange that brings liquidity to the assets. It is the reason that cash is the most liquid asset.

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3.

D

Working note:

Maximum money created = 5000*(1/.08)

Maximum money created = $62500

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