Suppose Checking Deposits Increase by $6,000 After All Rounds of the Money-Creation

question 84

Multiple Choice

Suppose checking deposits increase by $6,000 after all rounds of the money-creation process when the Fed buys $1,200 worth of U.S. government securities. This implies that the maximum value of the required reserve ratio would be _____

• A) 5.
• B) 0.75.
• C) 0.2.
• D) 1.2.
• E) 1.0.

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Definitions:

Latent Learning

Learning that occurs without any obvious conditioning or immediate display of behavior and manifests later when suitable.

Extinction

In psychology, the gradual weakening of a conditioned response that results in the behavior decreasing or disappearing.

Generalization

The ability to apply the lessons learned from specific instances to broader, similar situations without being explicitly taught for every situation.

Positive Reinforcement

A process in behavior analysis where the probability of a behavior occurring is increased by following it with the addition of a reinforcing stimulus.