Under Which of the Following Circumstances Would the Federal Reserve

question 98

Multiple Choice

Under which of the following circumstances would the Federal Reserve System want to decrease the money supply by increasing the reserve requirement?

• A) The economy is experiencing severe inflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing.
• B) The economy is experiencing severe inflation, yet market activity has been extremely high and erratic.
• C) The economy is experiencing severe deflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing.
• D) The economy is experiencing severe deflation, yet market activity has been extremely high and erratic.
• E) The economy is experiencing severe deflation, market activity is very low, and most financial institutions are low on M-1 resources.

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Definitions:

Locomotion

Is the ability to move from one place to another, which can involve walking, running, swimming, or other forms of physical movements.

Secondary Circular Reactions

The stage in Piaget's theory of cognitive development, occurring from about 4 to 8 months, where infants repeat actions that produce effects on the environment, showing early intentionality.

Goal

A desired result or outcome that an individual or system aims to achieve through a process of planning and effort.

Environment

The surrounding conditions and factors that affect living organisms, including natural elements and human-made influences.