If a Bank Uses $100 of Excess Reserves to Make

question 342

Multiple Choice

If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 10 percent, this action by itself initially makes the money supply

• A)and wealth increase by $100.
• B)and wealth decrease by $100.
• C)increase by $100 while wealth does not change.
• D)decrease by $100 while wealth decreases by $100.

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Definitions:

Observational Learning

A learning process where individuals change their behaviors or acquire new skills by watching and imitating others.

Distinction

The act of differentiating or distinguishing between two or more things, based on characteristics or qualities.

Insight Learning

A form of problem solving where the solution suddenly comes to the individual in what seems like a sudden stroke of enlightenment.

Spiritual Needs

The aspects of well-being that relate to a person's sense of purpose, beliefs, and connection to something greater than oneself.