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One Problem for Economic Stability Is That in a Period

Question 183

Multiple Choice

One problem for economic stability is that in a period of inflation,


A) banks will be tempted to increase lending in order to increase profits.
B) banks will be tempted to decrease lending in order to increase profits.
C) profit-oriented banks will tend to hold excess reserves and decrease the money supply.
D) deposits will decrease and banks will have to reduce lending.

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