If the Federal Reserve Increases the Interest Rate on Bank

question 196

Multiple Choice

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

• A)fewer reserves, so the reserve ratio will fall.
• B)fewer reserves, so the reserve ratio will rise.
• C)more reserves, so the reserve ratio will fall.
• D)more reserves, so the reserve ratio will rise.

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Definitions:

Confirmation Bias

The tendency to interpret new evidence as confirmation of one's existing beliefs or theories.

Multitasking

The performance of multiple tasks simultaneously by an individual or machine.

Framing Effect

The influence on decision making caused by the way information is presented, rather than by the information itself.

Confirmation Bias

The inclination to seek out, understand, prioritize, and remember data in a manner that supports one's already established views or theories.