An Increase in Reserves Leads to an Even Larger Increase

question 31

True/False

An increase in reserves leads to an even larger increase in deposits because banks have an incentive to lend their excess reserves.

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Definitions:

Skeletal

Relating to or functioning as a part of the skeleton, the internal framework that supports and determines the shape of an organism.

Cardiovascular

Relating to the heart and blood vessels and their functions in circulating blood throughout the body.

Negative Feedback

A regulatory mechanism in which a stimulus causes an opposite output in order to maintain an ideal level of whatever is being regulated.

Effector

A muscle, gland, or organ that responds to a stimulus from the nervous system by producing a specific effect or action.