1) Using T accounts show what happens to reserves at Security National Bank if one individual deposits $1000 in cash into her checking account and another individual withdraws $750 in cash from her checking account.
2) A bank with insufficient reserves can increase its reserves by
A) lending federal funds.
B) calling in loans.
C) buying short term Treasury securities.
D) buying municipal bonds.
3) Of the following, which would be the first choice for a bank facing a reserve deficiency?
A) Call in loans
B) Borrow from the Fed
C) Sell securities
D) Borrow from other banks
4) In general, banks would prefer to acquire funds quickly by ________ rather than ________.
A) reducing loans; selling securities
B) reducing loans; borrowing from the Fed
C) borrowing from the Fed; reducing loans
D) “calling in” loans; selling securities
5) ________ may antagonize customers and thus can be a very costly way of acquiring funds to meet an unexpected deposit outflow.
A) Selling securities
B) Selling loans
C) Calling in loans
D) Selling negotiable CDs