Which of the Following Statements Is True

question 183

Multiple Choice

Which of the following statements is true?

• A) The higher the required reserve ratio, the higher the deposit multiplier.
• B) The higher the excess reserves, the higher the deposit multiplier.
• C) The value of the deposit multiplier falls if economic agents withdraw cash from the banking system.
• D) The deposit multiplier only works to increase money supply, not to decrease money supply.

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Definitions:

Distal Stimuli

Objects and events in the external world that provide the basis for sensory input.

Proximal Stimuli

The patterns of stimuli from objects and events that actually reach your senses like the light hitting the retina or sound waves hitting the eardrum.

Top-Down Processing

A cognitive process that starts with the brain applying what it knows and what it expects to perceive and interpret sensory information.

Bottom-Up Processing

A cognitive approach in which perception starts with an incoming stimulus and builds upwards without preconceived knowledge of what is being observed.