Suppose That the Cash Drain in the Banking System Increases

question 52

Multiple Choice

Suppose that the cash drain in the banking system increases during holiday periods.As a result,

• A)the capacity of the banking system to create deposit money is dampened during holiday periods.
• B)the capacity of the banking system to create deposit money is increased during holiday periods.
• C)commercial banks decrease their target reserve ratios.
• D)changes in reserves will result in no change in deposits during holiday periods.
• E)the money supply will automatically increase.

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Definitions:

Capitalist System

An economic system where trade, industry, and the means of production are largely or entirely privately owned and operated for profit.

Social Relations

The interactions and connections among individuals within a society, shaping each other's behaviors, attitudes, and social structures.

Material Success

The accumulation of tangible wealth and possessions that are often seen as indicators of one's status or success in society.

Expectations

Socially constructed assumptions about how individuals should behave or what outcomes should occur in specific contexts.