The Banking System Can Increase Chequing Deposits by More Than

question 45

Multiple Choice

The banking system can increase chequing deposits by more than a single bank,because

• A) the banking system must keep reserves equal to 100% of its chequing deposits.
• B) the central bank follows policies that prevent reserves from falling below the level required by law.
• C) excess reserves loaned out by any particular bank will be deposited in some other bank.
• D) borrowers often retain a portion of a loan in cash.
• E) excess reserves loaned out by any particular bank will be taken out of circulation.

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Definitions:

Market Share

The share of a market that a certain company or product holds, frequently quantified as a proportion of the market's total sales.

Near-monopolies

Companies or entities that dominate a market to such an extent that they face little competition, often controlling prices and supply in the market.

Oligopolistic Competition

A market structure in which a few large firms dominate the market, with limited competition between them.

Positive Sum Game

A situation in which all participants can gain or benefit in some way, in contrast to a zero-sum game where one's gain is exactly balanced by another's loss.