What Happens to the Value of the Deposit Multiplier When

question 29

Multiple Choice

What happens to the value of the deposit multiplier when banks hold excess reserves?

• A) It is larger than the value implied by the formula.
• B) It is smaller than the value implied by the formula.
• C) It is only affected by the amount of loans that banks are willing to make, not the amount of excess reserves held.
• D) There is insufficient information to answer the question.

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Definitions:

Behaviorism

A field of psychology that focuses on observing and controlling behavior through environmental stimuli and responses, rather than internal thoughts and feelings.

Watson

John B. Watson, an American psychologist who established the psychological school of behaviorism, emphasizing the study of observable behavior over internal mental states.

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning and interaction with the environment, minimizing the role of heredity.

Skinner

B.F. Skinner, an influential American psychologist, known for his work in behaviorism and for developing the theory of operant conditioning.