Which of the Following Is True

question 97

Multiple Choice

Which of the following is true?

• A)​A majority of U.S.money, whether M1 or M2, is in the form of legal tender.
• B)​If a bank lends out its excess reserves of $90,000, at the time the loan is made, the money supply will increase by $90,000.
• C)​Reserve requirements exist primarily to eliminate bank runs.
• D)​When there are two forms of money available, people prefer to spend the form of money that is more valuable.

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Definitions:

Purchase-Money Security Interest

A legal claim granted to lenders over items purchased, serving as collateral for the loan used to purchase the goods.

Possession Of Collateral

Holding or control over property or assets pledged as security for a loan or obligation.

Private Sale

A transaction of goods or property conducted directly between individuals or parties without the involvement of a public auction or open market.

Public Sale

The process of selling goods or assets to the highest bidder in an open and public manner.