Explain How a Regulation Requiring Banks to Keep a Given

question 112

Essay

Explain how a regulation requiring banks to keep a given percentage of deposits in an account paying below market interest rates at the Fed is really a tax on banks.

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Definitions:

Principles

Fundamental truths or propositions that serve as the foundation for a system of belief or behavior or for a chain of reasoning.

Human Behavior

The range of actions and mannerisms exhibited by humans, influenced by culture, attitudes, emotions, values, and genetics.

Behaviorists

Psychologists who study and theorize that all behaviors are acquired through conditioning and interaction with the environment.

Conditioning

A psychological process through which behavior is learned by associating an action with a particular outcome.