Which of These Statements Best Describes Why the Required Reserve

question 2

Multiple Choice

Which of these statements best describes why the required reserve ratio is no longer relevant in most cases today?

• A)Sweep accounts eliminated the need for the required reserve ratio.
• B)Changes in the required reserve ratio can affect the size of the money multiplier.
• C)About 70% of banks already have reserves that exceed their level of required reserves.
• D)The required reserve ratio rarely had a positive effect in most situations.

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Definitions:

Coincidental Occurrence

An event or circumstance that occurs at the same time by chance but without any causal connection.

Illusory Correlation

The perception of a relationship between two variables even when no such relationship exists, often due to cognitive biases.

Predictive Accuracy

The degree to which a forecast or prediction correctly anticipates future events or outcomes.

Random Assignment

A method used in experiments where participants are allocated to different groups in a way that ensures each has an equal chance of being assigned to any group, reducing bias.