When Banks Hold a Large Amount of Excess Reserves, Which

question 211

Multiple Choice

When banks hold a large amount of excess reserves, which of the following tools would the Fed most likely use to encourage banks to lend more of these excess reserves?

• A) lowering the reserve requirement
• B) lowering the interest rate it pays to banks on their reserves
• C) lowering the discount rate
• D) making an open market sale

Grasp the principles of economic equity and the various perspectives (Rawlsian, utilitarian, and egalitarian) on equitable outcomes.

Interpret the significance of points on, within, and outside the utilities possibilities frontier in terms of efficiency, equity, and attainability.

Analyze the effects of trade between countries in terms of comparative and absolute advantage.

Explain the conditions for efficiency in production and in the output market, including the roles of marginal rates of substitution and transformation.

---

Definitions:

Bushels of Wheat

A unit of measure used in agriculture, particularly in the United States, for trading and pricing wheat.

Workers

Individuals engaged in a task or activity for wages or salary.

Diminishing Marginal Product

The decrease in the additional output gained from using an extra unit of a production input, holding all other inputs constant, beyond a certain point.

Marginal Product

The supplementary yield that comes from the utilization of an extra unit of a given input, with all other inputs remaining fixed.