When the Fed Increases the Reserve Requirement, Banks

question 36

Multiple Choice

When the Fed increases the reserve requirement, banks

• A) must increase the dollar volume of loans they make to customers.
• B) must pay more to borrow from the Fed.
• C) have fewer funds available for lending.
• D) will find their balance sheets temporarily out of balance.

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Definitions:

Units of Utility

A measure of satisfaction or pleasure that a consumer receives from consuming a product or service.

Utility

In economics, a measure of satisfaction or happiness that a consumer derives from the consumption of goods and services.

Satisfaction

The fulfillment of one's needs or the pleasure derived from consuming goods or services.

Consuming It

Pertains to the act of using up resources or products to satisfy needs or desires.