Which of the Following Statements Is True

question 195

Multiple Choice

Which of the following statements is true?

• A) The process of deposit expansion decreases the amount of money a bank can lend to borrowers.
• B) The process of deposit expansion is forbidden by the Federal Reserve.
• C) The Federal Reserve uses deposit expansion to counteract the effects of inflation.
• D) The Federal Reserve uses deposit expansion to slow down the growth rate of the economy.
• E) Deposit expansion can increase the amount of money a bank can lend to borrowers.

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Definitions:

401k Retirement Accounts

Tax-advantaged retirement savings accounts offered by employers, allowing employees to save and invest a portion of their paycheck before taxes are taken out.

Enron Corp.

An American energy company based in Houston, Texas, that famously collapsed in 2001 due to widespread corporate fraud and corruption.

Diversified

A strategy that involves spreading investments across various financial assets, industries, or other categories to reduce risk.

Market Risk

The risk of losses in investments due to factors that affect the overall performance of the financial markets.