1. When a bank relies on a policy of "purchased liquidity," it will generally be using more expensive funds.
True
False
2. When a bank deals with deposit "drainage" by buying more fed funds or entering the repurchase agreement market, we say the bank is using:
a. long-term funding sources
b. core deposits
c. purchased liquidity
d. liquidation of assets
3. When the spread between interest rates on RSA and RSL ____________, the bank's net interest income would be expected to ____________.
a. increases; increase
b. increases; decrease
c. decreses; increase
d. decreases; decrease