Suppose You Withdraw $1,000 from Your Checking Account

question 108

Multiple Choice

Suppose you withdraw $1,000 from your checking account. If the reserve requirement is 20 percent, how does this transaction affect the supply of money and the excess reserves of your bank?

• A) There is no change in the supply of money; your bank's excess reserves are reduced by $800.
• B) There is no change in the supply of money; your bank's excess reserves are reduced by $200.
• C) The money supply increases by $1,000, and the excess reserves of your bank are reduced by $800.
• D) The money supply increases by $1,000, and the excess reserves of your bank are reduced by $200.

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Definitions:

Reward

A benefit or positive reinforcement given for desirable behavior or performance, often used to encourage that behavior to happen again.

Behavioural Perspective

An approach in psychology focusing on observable behaviors and the ways in which environment conditions affect them.

Environmental Stimuli

External factors or changes in the environment that influence behavior or responses in organisms.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome, often reflecting a concern about future events.