Everything Else Held Constant, a Decrease in the Desired Reserve

question 159

Multiple Choice

Everything else held constant, a decrease in the desired reserve ratio will mean ________.

• A) a decrease in the money supply
• B) an increase in the money supply
• C) a decrease in chequable deposits
• D) an increase in advances to banks

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Definitions:

Deficit Spending

The practice of a government spending more money than it receives in revenue over a specific period, typically financed through borrowing.

Payroll Taxes

Charges applied to both employers and employees, often determined by a fraction of what employers compensate their workers.