If the Fed increases the required reserve ratio at a time when banks are holding excess reserves,
A) it forces banks to increase the money supply
B) it forces banks to decrease the money supply
C) it makes it possible for banks to increase the money supply but does not force them to do so
D) the money supply will not increase as much as if the Fed left the reserve ratio alone
E) it is conducting open market operations but not changing the money supply
Correct Answer:
Verified
Q95: The extent of money expansion will be:
A)greater
Q97: When the Fed sells U.S.government securities to
Q127: If the Fed wishes to reduce the
Q166: Under which of the following circumstances will
Q167: The Fed can reduce the money supply
Q168: An increase in banks' desire for liquidity
Q169: Suppose the banking system has no excess
Q171: The immediate effect of a bank's purchase
Q173: If banks allow some of their excess
Q175: Suppose the reserve requirement ratio is 20
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents