Suppose the Banking System Has $10 Million in Reserves, the Reserve

question 60

Multiple Choice

Suppose the banking system has $10 million in reserves, the reserve requirement is 20 percent, and there are no excess reserves. The public holds $10 million in cash. Then bankers decide that it is prudent to hold some excess reserves, and so begin to hold 25 percent of deposits in the form of reserves. Other things the same, what will this action cause the money supply to do?

• A)to change forms, but not size
• B)to fall by $10 million
• C)to fall by $5 million
• D)to fall by $0.5 million

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Definitions:

Disorganized Attachment

The insecure attachment pattern in which infants seem to lack a coherent method for dealing with stress. They may behave in seemingly contradictory ways, such as screaming for their mother but moving away when she approaches. In extreme cases, they may seem dazed.

Securely Attached

A term from attachment theory describing individuals, typically children, who show confidence in exploring their environment due to the reliable support and responsiveness of their caregivers.

Positive Play Behaviors

Interactions during play that are constructive, cooperative, and beneficial to social and cognitive development.

Continuity Of Attachment

Refers to the concept that emotional and social attachments formed in childhood persist over time, influencing an individual's relationships and emotional well-being throughout their life.