If the Reserve Requirement Is 10 Percent and Banks Desire

question 38

Multiple Choice

If the reserve requirement is 10 percent and banks desire to hold no excess reserves, when a bank receives a new deposit of $100,

• A)it must increase its required reserves by $10.
• B)its total reserves initially increase by $10.
• C)it will be able to make new loans up to a maximum of $10.
• D)None of the above is correct.

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Definitions:

Attribution Theory

The theory that explains how individuals pinpoint the causes of their own and others' behavior and events; it describes the cognitive process of attributing causes to events and behaviors.

Implicit Leadership Theory

The idea that people have ingrained beliefs and expectations about the attributes and behaviors that make an effective leader.

Transformational Leadership

A leadership style that inspires followers to exceed their own interests for the sake of the greater good, often leading to significant changes or improvements.

Universal Perspective

A viewpoint that considers all factors and conditions affecting a situation without bias.