Recall the Application About the Fed Increasing Bank Reserves During

question 148

Multiple Choice

Recall the Application about the Fed increasing bank reserves during the financial crisis in 2008 to answer the following question(s) . During the height of the financial crisis in September 2008, The Fed injected large amounts of reserves into banks, and in the next month, they started paying interest to banks on these reserves. Prior to this time, banks earned no interest on either required or excess reserves.
-According to this Application, the Fed started paying interest to banks on reserves. All else equal, this would tend to ________ on a bank's balance sheet.

• A) increase loans
• B) increase deposits
• C) increase reserves
• D) all of the above

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Definitions:

Cultural Practices

These are the patterns of behavior accepted by a society that reflect the beliefs, customs, and traditions of its people.

Behavioral Similarity

The degree to which individuals in a group exhibit the same behaviors or patterns of action.

Culture

The shared values, beliefs, behaviors, and norms of a group of people or society.

Personality Traits

Enduring characteristics that describe an individual's behavior, such as extroversion, agreeableness, and conscientiousness.