Low-Income Nations May Be Considering the Cost of Holding Excess

Multiple Choice

Low-income nations may be considering the cost of holding excess reserves as an insurance premium against a future currency crisis. Economists have commented that holding:

A) excess reserves is necessary and prudent.
B) reserves is unnecessary because the economy can always switch to floating rates.
C) excess reserves to such an extent is much too costly for poor countries.
D) excess reserves makes little difference when looking at the entire economy.