Under a fractional-reserve banking system, banks
a. hold more reserves than deposits.
b. generally lend out a majority of the funds deposited.
c. cause the money supply to fall by lending out reserves.
d. All of the above are correct.
b
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A point inside a production possibilities curve indicates
A. resources are not being used efficiently. B. an output combination that is unobtainable with the current resource and technology levels C. resources are being used very efficiently. D. opportunity costs are constant.
Which of the following will shift the aggregate demand curve to the right, ceteris paribus?
A) an increase in interest rates B) a decrease in disposable income C) a decrease in expected profits for firms D) an increase in net exports
A horizontal long-run industry supply curve occurs under conditions of
a. economies of scale b. diseconomies of scale c. monopoly d. increasing costs e. constant costs
How does the expenditure multiplier change when investment spending increases?
a. It increases. b. It decreases. c. It does not change. d. It briefly increase before returning to equilibrium.