A System That Requires Banks to Keep 100 Percent Reserves

question 166

Multiple Choice

A system that requires banks to keep 100 percent reserves

• A)would reduce the Fed's ability to control the money supply.
• B)would undermine the effectiveness of reserve requirement changes.
• C)would increase the Fed's ability to control the money supply.
• D)could be implemented with little change in bank policy.

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Definitions:

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves, linked to business cycles.

Frictional Unemployment

Unemployment that occurs when people are between jobs or are entering the labor market for the first time.

Discouraged Workers

Individuals who are not actively seeking work because they believe no jobs are available for them or there are no jobs for which they would qualify.

Unemployment Rate

The rate of unemployment among people actively looking for work in the labor force.