If the Fed increases the required reserve ratio at a time when banks are holding excess reserves,then:
A) the Fed's aim is to increase the money supply.
B) banks are likely to lend out more money than they would if the Fed left the reserve ratio alone.
C) banks are likely to earn higher profits than they would.
D) the money supply will not increase as much as it would if the Fed left the reserve ratio alone.
E) the Fed's aim is to conduct open market operations without changing the money supply.
Correct Answer:
Verified
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Q94: Suppose the reserve requirement ratio is 20
Q95: The extent of money expansion will be:
A)greater
Q97: When the Fed sells U.S.government securities to
Q98: Suppose the required reserve ratio is 0.2
Q99: The table below shows the balance
Q100: The higher the required reserve ratio,_.
A)the larger
Q101: M1 includes currency held in bank vaults.
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