Under Which of the Following Circumstances Will the Simple Money

question 36

Multiple Choice

Under which of the following circumstances will the simple money multiplier most overstate the change in chequable deposits that arises from a change in excess reserves?  

• A) The public withdraws no cash, and banks hold no excess reserves. 
• B) The public withdraws no cash, and banks hold excess reserves. 
• C) The public withdraws cash, and banks hold no excess reserves. 
• D) The public withdraws cash, and banks hold excess reserves.

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Definitions:

Creditor Responds

The process by which a creditor reacts or takes action in response to a debtor's payment behavior or proposal.

Bloomingdale's Credit Card

A branded credit card specifically for use at Bloomingdale's department stores, offering various benefits and rewards to cardholders.

Charged

In a legal context, it refers to formally accusing someone of a crime. In finance, it might refer to incurring a debt or a financial obligation.

Lost

Unable to find one's way or missing and not recoverable.