If People Refused to Use Banks to Create Checkable Deposits

question 12

Multiple Choice

If people refused to use banks to create checkable deposits, the banking system would:

• A) not be affected in the money creating process.
• B) not have a way to loan out excess reserves.
• C) be able to expand the money supply by more than the money multiplier indicates.
• D) not be able to create new money.

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Definitions:

Positive Reinforcement

A term from reinforcement theory, positive reinforcement refers to the situation in which a behavior is followed by positive consequences and thus is likely to be repeated.

Punishment

The imposition of a penalty or consequence as a result of a person's actions or behaviors, intended to reduce or eliminate those behaviors.

Intrinsic Motivation

The drive to perform activities for their own sake and for the internal satisfaction and fulfillment they bring, rather than for external rewards.

Expectancy Theory

A motivation theory stating that an individual's motivation is influenced by the belief that effort will lead to performance and performance will lead to desired rewards.