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Money Creation by Banks · Question 6 of 58

Question 6

MediumOriginal question

Read the two statements and choose the correct option.

I. Loans given by a bank are its assets.

II. Reserves kept by a bank are its liabilities.

Options for question 6

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Borrowers owe the bank, so loans are assets. I is true.

  2. Reserves are cash the bank holds: assets, not liabilities. II is false.

Concept
Assets and liabilities
Typical time
70 s
Your time
—
The rule this testsWhat commercial banks do
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