Refer to the Information Provided in Scenario 10

question 266

Multiple Choice

Refer to the information provided in Scenario 10.1 below to answer the questions that follow.
SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.
-Refer to the Economics in Practice on p. 193: The Economics in Practice feature discusses three examples of many people who have claims on a bank presenting those claims at the same time. This describes a situation known as

• A) barter.
• B) a bank run.
• C) currency debasement.
• D) the liquidity property of money.

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Definitions:

Cross-Products

The product of elements diagonally opposite each other when considering the multiplication of two matrices or arrays, or in vectors, it refers to the vector product of two vectors.

Least-Squares Regression Line

A straight line that minimizes the sum of the squared differences between the observed values and those predicted by the line.

Regression Assumptions

Fundamental conditions that must be met for the results of a regression analysis to be valid, including linearity, independence of errors, homoscedasticity, and normality of residuals.

Normal Probability Plot

A graphical technique for assessing whether or not a data set is approximately normally distributed, plotting observed values against normally distributed scores.