Suppose There Is a Bank Panic

question 204

Multiple Choice

Suppose there is a bank panic.Which of the following would not be a consequence of this bank panic?

• A)Bank total reserves would decrease.
• B)Required reserves would increase.
• C)Bank checking account balances would decrease.
• D)Individual banks would have to shrink the value of loans they made.
• E)The economy would likely enter into a recession.

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Definitions:

Annually Budgeted

Annually budgeted refers to the process of allocating financial resources and planning expenditures for a year ahead.

Expansionary Gap

A situation where the actual economic output exceeds the potential output significantly, often leading to inflation.

Cyclically Balanced

A term that might not be widely recognized in standard economic literature; if intended to mean maintaining balance over economic cycles, it could refer to the aim of achieving economic stability across different phases of economic cycles.

Automatic Stabilizers

Economic policies and programs designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers.