If Banks Cannot Lend All of Their Excess Reserves

question 233

Multiple Choice

If banks cannot lend all of their excess reserves:

• A) the money multiplier increases.
• B) the money multiplier decreases.
• C) the money multiplier stays the same.
• D) the amount of loans by the bank increases.
• E) checkable deposits decrease.

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Definitions:

Reliance

Reliance refers to the act of depending or counting on someone or something, often in the context of legal contracts where one party's actions are based on the promises or agreements made by another.

Donee Beneficiary

A party who benefits from a contract made between two other parties, without any obligations to perform or pay.

Intended Beneficiary

An individual or group for whom a contract is specifically made to benefit, granting them certain rights or benefits.

Creditor Beneficiary

A creditor beneficiary is a third party that benefits from a contract in which one party (the promisor) agrees to pay a debt owed to the beneficiary by the other party (promisee).