Under Which of the Following Circumstances Will the Simple Money

question 61

Multiple Choice

Under which of the following circumstances will the simple money multiplier most overstate the change in checkable deposits arising from a change in excess reserves?

• A)The public withdraws no cash and banks hold no excess reserves.
• B)The public withdraws no cash and banks hold excess reserves.
• C)The public withdraws cash and banks hold no excess reserves.
• D)The public withdraws cash and banks hold excess reserves.
• E)The required reserve ratio equals 1.

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Definitions:

Lewis Structure

A graphical representation illustrating how atoms in a molecule are bonded together and depicting any unpaired electrons present within the molecule.

Boron Trifluoride

A chemical compound with the formula BF3, known for its role as a strong Lewis acid in organic and inorganic chemical reactions.

Octet

A rule in chemistry stating that atoms tend to combine in such a way that they each have eight electrons in their valence shells, giving them the same electronic configuration as a noble gas.