Which of the Following Statements Is Most Correct

question 37

Multiple Choice

Which of the following statements is most correct?

• A) Bank reserves are not affected by transactions involving the Treasury.
• B) Derivative deposits occur when reserves created from primary deposits are made available through bank loans to borrowers who leave them on deposit in order to write checks against the funds.
• C) Total bank reserves in the banking system consist of bank's member bank deposits held in Federal Reserve Banks, plus non-member banks vault cash.
• D) Federal Reserve notes have been increasingly backed by gold certificates and eligible paper in recent years.

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Definitions:

Behavioral Economics

An area of economic research that incorporates psychological insights into human behavior to explain economic decision-making.

Rational Economics

An approach to economics that assumes individuals make decisions based on logical evaluation of available information, aiming for maximum utility.

Learned Behavior

Actions or reactions that an individual acquires through experience or by being taught.

John Maynard Keynes

A British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.