When Reserve Requirements Are Increased, the

question 164

Multiple Choice

When reserve requirements are increased, the

• A) excess reserves of commercial banks will decrease.
• B) excess reserves of commercial banks will increase.
• C) U.S. Treasury will have to borrow additional funds.
• D) money supply will rise.

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Definitions:

Repossession

The process by which a creditor takes back property from the borrower due to failure to meet the repayment terms of the loan.

Purchase-Money Security Interest

A legal claim granted to lenders over items purchased, serving as collateral for the loan used to purchase the goods.

Possession Of Collateral

Holding or control over property or assets pledged as security for a loan or obligation.

Private Sale

A transaction of goods or property conducted directly between individuals or parties without the involvement of a public auction or open market.