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Assume a Bank Receives Large Deposits of Checks

question 35

Essay

Assume a bank receives large deposits of checks. This of course increases the amount of its reserves. However, why does this not increase its lending potential by the full amount of these deposits?


Definitions:

Stimulants

Substances that temporarily increase alertness and energy levels by enhancing the activity of the central nervous system.

Stimulant

A substance that raises levels of physiological or nervous activity in the body, often used to enhance alertness or physical performance.

Amphetamines

A class of stimulant drugs that increase activity within the brain and nervous system, often used to treat ADHD and narcolepsy but can be abused as performance-enhancing or recreational drugs.

Personal Goal

An individual’s aim or desired outcome that they work towards through action or behavior, often reflecting personal values and aspirations.

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