Though a Powerful Tool, the Reserve Requirement Is Seldomly Used

question 60

Multiple Choice

Though a powerful tool, the reserve requirement is seldomly used by the Fed to control the money supply because:

• A) it causes significant disruptions in the banking system.
• B) using the reserve requirement can be inflationary.
• C) it is very difficult for the Fed to monitor the reserve requirement.
• D) it takes a long time for the policy to be implemented.

---

Definitions:

Confidence Interval

A range of values, derived from statistical analysis, that is likely to contain the true value of an unknown population parameter.

Margin of Error

A statistical measure that represents the amount of error in a survey's results, which indicates the range within which the true value is expected to lie with a certain level of confidence.

Reduced-Fat Cookies

Cookies formulated with less fat content than their traditional counterparts, aiming to provide a healthier snack option.

Grams of Fat

A nutritional measurement indicating the amount of fat, in grams, contained in a food item.