If There Were an Increase in the Number of Bank

question 41

Multiple Choice

If there were an increase in the number of bank failures, we should expect the amount of excess reserves in the banking system to:

• A)Decrease
• B)Increase
• C)Not change
• D)Decrease since failing banks lost theirs

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Definitions:

Forecast Error

The difference between the actual value and the predicted value in a forecast, indicating the accuracy of the forecasting process.

Weighting Scheme

A method of assigning different weights or importance to various elements or criteria in order to calculate a composite score or make decisions.

Exponential Smoothing

A technique used in time-series analysis to smooth data and forecast by giving greater weight to more recent observations.

Exponential Smoothing Forecast

A time series forecasting method that applies decreasing weights to older data.