The Money-Creation Process Generated by an Injection of Reserves Stops

question 211

Multiple Choice

The money-creation process generated by an injection of reserves stops when

• A)people deposit their loans into other banks.
• B)reserve requirements are raised.
• C)the increase in required reserves equals the size of the injection.
• D)bankers begin to fear runs and stop making loans.

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Definitions:

Bonded

indicates a state of being secured by a bond, involving a financial guarantee or protection against losses.

Shirking

The act of avoiding or neglecting responsibilities, especially in the workplace, leading to reduced productivity or performance.

Incentive Contracts

Contracts that provide rewards for performance above a certain standard, encouraging higher levels of effort or achievement.

Monitoring

The process of supervising activities or individuals to ensure compliance, performance, or progress towards objectives.