If the Fed Were to Increase the Required Reserve Rate

question 8

Multiple Choice

If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would:

• A) double.
• B) increase by 10 percent.
• C) decrease by a factor of ten.
• D) be half as large as it was before the increase.

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Definitions:

Hippocampus

A major component of the brain in humans and other vertebrates, associated with memory forming, organizing, and storing.

Temporal Lobes

are regions of the cerebral cortex located beneath the lateral fissure on both cerebral hemispheres of the brain, involved in processing auditory information and encoding memory.

Memory Trace Decay

The theory that memory fades and disappears over time if not accessed and used, attributing forgetting to the deterioration of memory traces.

Proactive Interference

The phenomenon where older memories hinder the recall of newer memories.