If This Same Bank Has Its Legal Reserve Requirement Raised

question 20

Multiple Choice

If this same bank has its legal reserve requirement raised to 18 percent,it

• A) need not do anything since it still has sufficient legal reserves to meet this new requirement.
• B) must take steps to increase its demand deposits by making new loans from its reserves.
• C) should discourage new demand deposit accounts until its legal reserves are increased.
• D) must either sell securities or not renew loans as they come due.
• E) should buy government securities to increase the money supply.

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Definitions:

Psychology

Research into the human brain and its activities, with an emphasis on how they determine behavior in particular contexts.

Psychological Research

The scientific study of the mind and behavior through experiments, observations, and analysis to understand mental functions and social behavior.

Human Nature

The inherent characteristics, including ways of thinking, feeling, and acting, that all humans tend to have.

Cultural Influences

The impact of societal norms, values, and traditions on an individual's behavior, beliefs, and attitudes.