The Money-Creation Process Generated by an Injection of Reserves Stops

question 211

Multiple Choice

The money-creation process generated by an injection of reserves stops when

• A)people deposit their loans into other banks.
• B)reserve requirements are raised.
• C)the increase in required reserves equals the size of the injection.
• D)bankers begin to fear runs and stop making loans.

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Definitions:

Probability Distribution

A numerical function outlining all conceivable outcomes and their associated chances for a random variable within a certain range.

Random Variable

A variable determined by the numerical results of chance phenomena.

Variance

A statistical measurement that represents the degree of spread or dispersion of a set of data points.

Random Variable

A variable that takes numerical forms based on the randomness of certain events.