An Increase in the Quantity of Reserves Leads to a

question 154

Multiple Choice

An increase in the quantity of reserves leads to a

• A) fall in the federal funds rate.
• B) decrease in the price level.
• C) reduction in the velocity of circulation.
• D) leftward shift in the demand curve for reserves.

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Definitions:

Reciprocity Norm

A social norm that dictates that we should repay, in kind, what another person has provided us, promoting the exchange of goods, services, and favors.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values.

Fundamental Attribution Error

The tendency to overemphasize personality-based explanations for behaviors observed in others while underemphasizing the role of situational factors.

Defensive Attribution

A psychological process by which individuals tend to ascribe greater blame to the victims of misfortune for their own victimization when they feel threatened by the likelihood of a similar event happening to them.