If Banks Decide to Hold a Smaller Part of Their

question 4

True/False

If banks decide to hold a smaller part of their deposits as excess reserves, the money supply will fall, other things equal.

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Definitions:

Dentate Gyrus

A part of the hippocampus in the brain involved in the formation of new memories and one of the few regions where neurogenesis (the growth of new neurons) occurs.

Neurogenesis

The process by which new neurons are formed in the brain.

Hippocampus

A major component of the brain in humans and other vertebrates, associated with memory formation and spatial navigation.

Prefrontal Cortex

A region at the front of the brain associated with complex behaviors such as decision making, planning, and moderating social behavior.