Under Which of the Following Circumstances Would the Federal Reserve

question 98

Multiple Choice

Under which of the following circumstances would the Federal Reserve System want to decrease the money supply by increasing the reserve requirement?

• A) The economy is experiencing severe inflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing.
• B) The economy is experiencing severe inflation, yet market activity has been extremely high and erratic.
• C) The economy is experiencing severe deflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing.
• D) The economy is experiencing severe deflation, yet market activity has been extremely high and erratic.
• E) The economy is experiencing severe deflation, market activity is very low, and most financial institutions are low on M-1 resources.

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Definitions:

Variable-Ratio

A schedule of reinforcement where a response is rewarded after an unpredictable number of responses, often used in behavior modification.

State Lottery Tickets

Tickets sold by a governmental entity, allowing participants a chance to win monetary prizes through a random drawing process.

Resistance To Extinction

The persistence of learned behavior or response patterns even after the removal of the reinforcing stimulus.

Continuous Reinforcement

A learning process where a behavior is reinforced each time it occurs, leading to faster learning but quicker extinction once reinforcement stops.