Which of the Following Best Describes the Chain of Events

question 108

Multiple Choice

Which of the following best describes the chain of events in the money creation process?

• A) Low interest rates discourage people from holding currency. When they deposit the currency, interest rates rise, increasing the quantity of money.
• B) Desired reserves increase, encouraging banks to seek new deposits. When the new depositors come in, desired reserves decrease and the quantity of money increases.
• C) Currency is drained from the quantity of money into the banking system, where it is lent out. The loans are spent, increasing the currency drain and also the quantity of money.
• D) The monetary base increases. Banks acquire excess reserves which they loan out, increasing deposits and also the quantity of money. The new deposits then create additional excess reserves.

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Definitions:

Pay Package

The total compensation provided to an employee, including salary, bonuses, benefits, and any other financial rewards.

Base Pay

The initial rate of compensation that an employee receives in exchange for their services, excluding any bonuses, benefits, or raises.

Indirect Pay

Compensation that is not directly paid as cash but includes benefits like insurance, retirement plans, and vacations.

Base Pay

The initial salary or wage paid by an employer, excluding any benefits, bonuses, or raises.