Everything Else Held Constant,an Increase in the Required Reserve Ratio

question 200

Multiple Choice

Everything else held constant,an increase in the required reserve ratio on checkable deposits causes the M1 money multiplier to ________ and the money supply to ________.

• A)decrease;increase
• B)increase;increase
• C)decrease;decrease
• D)increase;decrease

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Definitions:

Erosion

The process by which natural forces like water, wind, ice, and gravity wear away land surfaces, redistributing the materials.

Sediment

Particles of rock and organic material that are transported and deposited by wind, water, or ice.

Reservoir

1. A lake that is created by a human-constructed dam. 2. A subsurface volume of rock that has sufficient porosity and permeability to permit the accumulation of oil or natural gas under adequate trap conditions.

Delta

A landform at the mouth of a river where it splits into several streams or channels and deposits sediment, creating a fan-shaped area.