AP Macroeconomics Question 60: Answer and Explanation
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10. On a bank's balance sheet, which of the following is considered a liability?
- A. Required reserves
- B. Excess reserves
- C. Loans
- D. Deposits
- E. Reserve ratio
Correct Answer: D
D Reserves are assets of the bank, as are loans, which must be repaid to the bank. Because depositors and not the bank own deposits, deposits are liabilities that must eventually be returned to the owners.