The Reason Why the Banking System Can Increase Checkable Deposits

question 91

Multiple Choice

The reason why the banking system can increase checkable deposits by a multiple of initial deposits is that:

• A)the banking system must keep reserves equal to 100 percent of its checkable deposits.
• B)the central bank follows policies that prevent reserves from falling below the level required by law.
• C)reserves lost by any particular bank are gained by the Federal Reserve Bank.
• D)borrowers often spend most of a loan which is then deposited.

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Definitions:

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Temporary support to help a child master a task.

Overgeneralizing

Involves making broad conclusions or rules based on a single or few instances, often leading to inaccurate judgments or stereotypes.

Pragmatics

A subfield of linguistics concerned with the ways in context influences the interpretation of meaning.

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Difficulty or inability in using language normally, including problems with producing or comprehending spoken or written communication.