The Following Question Refer to the Table That Follows

question 15

Multiple Choice

The following question refer to the table that follows. Assume that there is a fractional-reserve banking system, that the legal reserve requirements are 10 percent, and that the balance sheet for Bank X is as follows:

-If Bank X safely increases its loans

• A) the country's money supply is unaffected.
• B) the bank's net worth is immediately increased.
• C) both its demand deposit liabilities and its assets will be temporarily increased by the amount of the loan.
• D) only its demand deposit liabilities will be increased.
• E) its demand deposit liabilities will be increased by some multiple of the loan.

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Definitions:

Opponent Process Theory

A psychological and neurological model that describes how humans perceive colors as the result of opposing responses between two sets of cones in the eyes.

Colour Vision

The ability of the visual system to distinguish and perceive different wavelengths of light as distinct colors.

Proximal Stimulus

The physical energy from a stimulus that directly interacts with sensory receptors, such as light hitting the retina.

Information Processing

A cognitive approach that emphasizes the ways in which people encode, store, and retrieve information.