If a Number of People Suddenly Deposit into Their Checking

question 99

Multiple Choice

If a number of people suddenly deposit into their checking accounts a great deal of cash previously kept in their pockets or at home, other things constant, their actions will

• A) create excess reserves and place banks in a position to extend additional loans, which will reduce the money supply.
• B) create excess reserves and place banks in a position to extend additional loans, which will expand the money supply.
• C) lead to higher interest rates.
• D) force the Fed to reduce its discount rate.

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Definitions:

Extinction

In the context of behavioral psychology, it refers to the gradual reduction and eventual elimination of a conditioned response.

Not Effective

Lacks the ability to produce a desired or intended result.

Reasons

The explanations or justifications for an action or belief, often examined in the context of decision-making and problem-solving.

Omission Training

A learning process in which a response leads to the removal of an expected reward or positive outcome, thereby decreasing the likelihood of that response in the future.