An Increase in the Required Reserve Ratio Would Be

question 159

Multiple Choice

An increase in the required reserve ratio would be

• A) a restrictive policy because it lowers the amount of total reserves in the banking system.
• B) a restrictive policy because it lowers the amount of excess reserves in the banking system.
• C) an expansionary policy because it raises the amount of total reserves in the banking system.
• D) an expansionary policy because it raises the amount of excess reserves in the banking system.
• E) an expansionary policy because it raises the amount of required reserves in the banking system.

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Definitions:

MC

A term often short for Marginal Cost, which is the cost added by producing one additional unit of a product or service.

MR

Short for Marginal Revenue, which is the additional income earned by selling one more unit of a product or service.

ATC

Average Total Cost, which is the total cost of production (fixed plus variable costs) divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced.