Consider the Creation of Deposit Money in the Banking System

question 40

Multiple Choice

Consider the creation of deposit money in the banking system.One implication of an increase in the cash drain to the public is that the

• A)banking system cannot create any additional money following a new deposit.
• B)amount of new money that can be created from a new source of reserves is increased.
• C)desired ratio is reduced.
• D)desired reserve ratio is increased.
• E)banking system's ability to create new money following a new deposit is reduced.

---

Definitions:

Consequentialism

A general approach to ethical dilemmas which requires that we consider the consequences our actions will have on relevant people.

Rigid Set

In mathematics, a set whose members adhere to strict criteria or definitions, often used in contrast to more flexible or loosely defined collections.

Consequentialism

An ethical theory that judges whether an act is right or wrong based on its consequences.

Utilitarianism

The ethical principle that urges individuals to act in a way that creates the most happiness for the largest number of people.