If Reserves in the Banking System Increase by $100, Then

question 141

Multiple Choice

If reserves in the banking system increase by $100, then chequable deposits will increase by $100 in the simple model of deposit creation when the desired reserve ratio is ________.

• A) 0.01
• B) 0.10
• C) 0.20
• D) 1.00

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Definitions:

Quantitative Predictor Variables

Variables that can be quantified and measured and are used to predict outcomes in statistical analyses.

Indicator Variables

Variables used in statistical models that take the value of 1 if a certain condition is met and 0 otherwise, often used to represent categorical data.

Regression Model

A statistical model used to estimate the relationship between a dependent variable and one or more independent variables.

Stepwise Regression

A method of regression analysis in which the choice of predictive variables is carried out by an automatic procedure.