Decreasing the Reserve Requirement Ratio Is

question 198

Multiple Choice

Decreasing the reserve requirement ratio is

• A) a contractionary policy because it lowers the amount of total reserves in the banking system.
• B) a contractionary policy because it lowers the amount of excess reserves in the banking system.
• C) an expansionary policy because it raises the amount of excess reserves in the banking system.
• D) an expansionary policy because it raises the amount of required reserves in the banking system.

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Definitions:

Monthly Payments

Regular payments made every month, commonly associated with loans, mortgages, or subscription services.

Loan

A sum of money that is borrowed, typically from a financial institution, which is expected to be paid back with interest.

Compounded Semi-annually

Interest calculation where interest earned over six months is added to the principal, affecting future interest computations.

Monthly Payments

Regular payments made each month, often towards the repayment of a loan or mortgage.