Some Economists Have Advocated Replacing Government Deposit Insurance with 100-Percent-

question 96

Essay

Some economists have advocated replacing government deposit insurance with 100-percent- reserve banking. Under this plan, banks would hold all deposits as reserves. Deposit insurance would no longer be necessary, because banks would always have the reserves to meet customer withdrawals. a. What would happen to the money supply (defined as currency and bank deposits) in the transition from fractional-reserve to 100 -percent-reserve, if this plan were implemented, holding other factors constant?
b. What will be the value of the money multiplier?

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The segment of a sentence or clause which includes a verb and provides information about the subject.

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A clause which provides additional information about a noun or pronoun in a sentence but does not limit or define it in an essential way.

Asserted

Stated with confidence or declared strongly as a fact.

Connective

A logical operator that links propositions in compound sentences, such as "and," "or," "not."