The Banking System Can Lend the Sum of Its Excess

question 19

Multiple Choice

The banking system can lend the sum of its excess reserves because

• A)Banks are required to keep only a fraction of deposits on reserve.
• B)Bank assets are greater than bank liabilities.
• C)Required reserves are a leakage from the banking system.
• D)The money multiplier is less than 1.

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Definitions:

Two-tail Test

A statistical test that is used to determine if there is a significant difference between a sample and a particular population mean, where the critical region is split between both tails of the distribution.

Population Proportion

A measure that describes the percentage of a specific characteristic in a population.

Z-test

An analysis technique that evaluates the difference in means between two populations with known variances and substantial sample sizes.

Nominal Data

Data categorized without a natural order or ranking, distinguished merely by name.