Evaluate the following statement:”Banks must walk a tightrope between illiquidity and unprofitability because the prudent policies such as holding lots of reserves that maintain liquidity reduce profitability.”

In your initial post to this discussion, respond to one of the following prompts based on what you’ve learned in this module about banking.Option 1:Evaluate the following statement:”Since any bank can only lend out its excess reserves, an increase in the monetary base that provides banks with excess reserves leads to a dollar for dollar increase in the money supply through bank lending.”Option 2:Evaluate the following statement:”Banks must walk a tightrope between illiquidity and unprofitability because the prudent policies such as holding lots of reserves that maintain liquidity reduce profitability.”Option 3:In what way is it true that “banks make money by making money”?