After Reading the Section of the Textbook on Concepts, Mary

question 105

Multiple Choice

After reading the section of the textbook on concepts, Mary Jo comes to the conclusion that

• A) concepts are a form of cognitive efficiency and economy.
• B) concepts are the way people communicate with each other.
• C) concepts are abstract and have few practical applications.
• D) concepts are the reason that there are linguistic differences between ethnic groups.

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are mandated to keep as reserves by the central bank to ensure liquidity and stability in the financial system.

Money Multiplier

The multiple by which the money supply changes as a result of a change in fresh reserves in the banking system.

Money-Creation Process

The procedure through which the banking system generates money by issuing loans greater than the amount of reserves it holds.

M1

The measure of a country's money supply that includes physical currency and coin, demand deposits, traveler's checks, and other checkable deposits.