The Basic Reason Why the Chartered Banking System Can Increase

question 66

Multiple Choice

The basic reason why the chartered banking system can increase its demand deposits by a multiple of its excess reserves is that:

• A)reserves lost by any particular bank will be gained by some other bank.
• B)the central banks follow policies that prevent reserves from falling below the level required by law.
• C)the MPC of borrowers is greater than zero, but less than 1.
• D)the banking system must keep reserves equal to 100 percent of its demand-deposit liabilities.

---

Definitions:

Performance

The act or process of carrying out an action, task, or function, often measured against a known standard or expectation.

First-Time Leader

This refers to an individual who is taking on a leadership role for the first time, navigating the challenges and responsibilities of guiding others.

Self-Leadership

The practice of intentionally influencing your thinking, behavior and actions towards achieving your objectives.

External Leader

A leader who is not a member of a team or organization but influences it from the outside.