If the Reserve Requirement Is 25%, Then a $500 Increase

question 55

Multiple Choice

If the reserve requirement is 25%, then a $500 increase in deposits means that the money supply

• A) will increase by $2,000.
• B) has the potential to increase by $2,000.
• C) will increase by $125.
• D) has the potential to increase by $125.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.