If Banks Keep One-Eighth of Their Deposits in the Form

question 286

Multiple Choice

If banks keep one-eighth of their deposits in the form of reserves, and the Fed credits Alex's bank account with $8,000, how much does the money supply increase?

• A) $1,000
• B) $8,000
• C) $16,000
• D) $64,000

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Definitions:

Neurotics

Individuals who experience emotional distress and mental instability, but have a strong grip on reality.

Kelly's 11 Constructs

A reference to the 11 core constructs outlined by psychologist George Kelly to categorize an individual's personal system of viewing the world, part of his theory of personality.

Erikson's 8 Lifespan Phases

A psychoanalytic theory proposed by Erik Erikson that outlines eight stages of psychosocial development, each characterized by a central conflict that individuals must resolve to develop a healthy personality.

Cognitive Psychology

A branch of psychology focused on the study of mental processes such as perception, memory, thought, and problem-solving.