In a Simplified System, a Bank Receiving a New Deposit

question 229

True/False

In a simplified system, a bank receiving a new deposit can extend new loans equal to the amount by which its excess reserves increase.

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Definitions:

Fixed Proportions

A production process condition where inputs must be used in strict, unchangeable ratios to produce an output; no substitution between inputs is possible.

Utility Function

An economic term describing how different goods or services yield different levels of satisfaction or utility to a consumer.

Units

Refers to the individual or measurable components that can be sold, used, or accounted for, in various contexts such as production, inventory, or measurement standards.

Utility Function

A mathematical representation of a consumer's preference ordering over a set of goods and services, showing the satisfaction level from consumption.