If a bank is low on reserves

a) There is a risk of insolvency

b) There is a risk of illiquidity

c) It should consider selling some of its assets

d) It will hasten to repay its creditors

If inflation expectations are anchored to a target rate

a) The economy can be expected to return to the natural rate of output more rapidly after an aggregate demand shock

b) Bringing down inflation will require less of an increase in unemployment

c) Long-term interest rates will change less in response to changes to short-term interest rates

d) We may expect a smaller volume of lending in the economy