The Chartered Banking System Can Lend by a Multiple of Its

question 86

Multiple Choice

The chartered banking system can lend by a multiple of its excess reserves primarily because:

• A)its reserves are on deposit with the Bank of Canada
• B)its reserves are highly liquid assets.
• C)it loses reserves when it extends credit.
• D)its reserves are fractional.

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Definitions:

Decompression Melting

The process by which melt is generated within the Earth when a body of rock is held at approximately the same temperature but the pressure is reduced.

Mantle-Derived Magmas

Magmas that originate from melting processes within the Earth's mantle, often associated with tectonic activity and volcanic eruptions.

Continental Crust

The thick, buoyant part of Earth's crust that forms the continents, characterized by a diverse composition of rock types.

Decompression Melting

Melting that occurs when rock ascends in the Earth's mantle, reducing pressure and causing it to melt without heating.