Explain What Excess Reserves Are

question 106

Essay

Explain what excess reserves are.Why do banks face a disincentive to hold a significant amount of excess reserves?

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Definitions:

Experimenter Bias

A form of bias introduced by the experimenter's expectations or personal beliefs affecting the outcome of research.

Clever Hans Effect

The phenomenon where individuals subconsciously influence the outcome of a study due to their expectations.

Double-blind Study

A research method in which neither the participants nor the experimenters know who is receiving a particular treatment, thereby eliminating bias.

Control Group

A control group is a group in an experiment or study that does not receive the experimental treatment and is used as a benchmark to measure the effects of the treatment.