If Banks Increase Excess Reserves to Increase Their Ability to Absorb

question 149

Multiple Choice

If banks increase excess reserves to increase their ability to absorb a higher rate of defaults, the _____ multiplier will _____.

• A) potential; rise
• B) potential; fall
• C) actual; rise
• D) actual; fall

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Definitions:

Intergroup Conflict

A situation where members of different groups experience friction, disagreement, or opposition due to differing interests, beliefs, or objectives.

Cohesion

The degree to which members of a group or society are united in their beliefs, values, or purpose.

Group Conformity

The phenomenon where individuals adjust their behavior or attitudes to align with the norms of a group.

Group Norms

Shared expectations within a group about how members should behave.