What Must Be True When People Decide to Hold Some

question 25

Multiple Choice

What must be true when people decide to hold some of their cash and not deposit it?

• A) The money multiplier overestimates how much money will be created in the economy.
• B) The money multiplier underestimates how much money will be created in the economy.
• C) The reserve ratio is not fully functioning and should be raised.
• D) The reserve ratio is working too well and should be lowered.

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Definitions:

Tradable Pollution

A system where companies or countries can buy or sell allowances to emit a certain amount of pollutants, with the aim of reducing overall emissions.

Cap-And-Trade

An environmental policy tool that limits greenhouse gas emissions by allocating emission allowances and permitting the trading of these allowances among emitters.

Market Approach

An economic method that determines the value of a business, business ownership interest, or security using one or more methods that compare the subject to similar businesses, business ownership interests, or securities that have been sold.

Genuine Progress Indicator

An economic measure that accounts for welfare, incorporating factors like environmental health and social well-being, offering an alternative to GDP.