Question:
What does a bank do if there are no excess reserves?
What does a bank do if there are no excess reserves?
Show Hint
What do banks do when they have no extra money?
Updated On: Jan 17, 2026
- Stop Client's transaction
- Borrow reserves from other bank
- Ask client's to repay loans
- Increases lending rate
Hide Solution
Verified By Collegedunia
The Correct Option is B
Solution and Explanation
When a bank has no excess reserves, it may borrow reserves from other banks to meet its reserve requirements.
Banks typically manage their reserves to ensure they can cover withdrawals and meet regulatory requirements.
Borrowing reserves from other banks is one of the strategies they use in such cases.
Hence, the correct answer is (b).
Was this answer helpful?
0
0
Top Questions on Money and Inflation
- “During the colonial period the agricultural sector showed massive stagnation.” Do you agree with the given statement? Justify your answer with valid arguments.
- CBSE CLASS XII - 2024
- Economics
- Money and Inflation
- “There exists a positive correlation between human capital formation and economic growth of a nation.” Justify the given statement with valid explanation.
- CBSE CLASS XII - 2024
- Economics
- Money and Inflation
- The existence of purchasing power parity in an open economy implies that
(A) The purchasing power of individuals depends on inflation rate
(B) The exchange rate between two countries' currency is equal to the ratio of their price levels
(C) Law of one price holds
(D) The price levels of all countries are equal when measured in terms of the same currency
Choose the correct answer from the options given below:- CUET (PG) - 2024
- Economics
- Money and Inflation
- Match List-I with List-II:
List-I
List-II
A Money supply is exogenously given. I Post-Keynesian school B Money supply is demand driven and credit led. II Say’s law C Rational expectation. III Monetarism D Supply creates its own demand IV Neo-classical school
Choose the correct answer from the options given below- CUET (PG) - 2024
- Economics
- Money and Inflation
- If the expected rate of return from the investment projects in India be 10% per annum, and if the exchange rate becomes Rs.88 per USD from Rs.80 per USD in one year, what would be the expected amount of profit in terms of US Dollar from an investment project of 100 Million USD in India from the point of view of an investor from the USA?
- CUET (PG) - 2024
- Economics
- Money and Inflation
View More Questions
Questions Asked in CUET PG exam
- Upper palaeolithic culture in India is dominated by:
- CUET (PG) - 2025
- Prehistoric Archaeology
- Which of the following species are included among gracile australopithecines?
A. A. africanus
B. A. boisei
C. A. afarensis
D. A. anamensis
Choose the correct answer from the options given below:- CUET (PG) - 2025
- Paleoanthropology
- A bought an article at a certain price and sold it at 10% profit. B bought the same article at a price 10% lesser than A and sold it at ₹18 lesser than A. B's gain percentage in this deal is 20%. At what price B bought the article?
- CUET (PG) - 2025
- Profit and Loss
- The traffic lights at three different road crossings change after every 48 seconds, 72 seconds and 108 seconds respectively. If they all change simultaneously at 8:20:00 hours, then at what time will they again change simultaneously?
- CUET (PG) - 2025
- Quantitative Aptitude
- In terracotta which materials are mainly used to build strong clay
(A) Grog
(B) Metal
(C) Cotton
(D) Stone
Choose the correct answer from the options given below:- CUET (PG) - 2025
- Ceramics and Pottery
View More Questions