The Fact That Reserves Lost by Any Particular Bank Will

question 255

Multiple Choice

The fact that reserves lost by any particular bank will be gained by some other bank explains why the commercial banking system

• A) has been able to reduce the vulnerability of banks to "runs" or "panics."
• B) can increase its demand deposits by a multiple of its excess reserves.
• C) cannot increase its demand deposits by a multiple of its excess reserves.
• D) has been based on the fractional reserve system of banking.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.