If the Federal Reserve Is Currently Paying 0

question 26

Multiple Choice

If the Federal Reserve is currently paying 0.75% interest on bank reserves, but then increases that interest rate to 1%, banks may decide to hold ______ reserves, and the money supply may _____.

• A)more; increase
• B)more; decrease
• C)fewer; increase
• D)fewer; decrease

---

Definitions:

Transition

The process or period of changing from one state or condition to another.

Rigid Stance

A firm or inflexible position or opinion on a particular subject, showing little to no willingness to change.

Opening Statement

The initial remarks of an argument, presentation, or legal trial, aimed at providing an overview or setting the context.

Presentation

A structured delivery of information to an audience, often involving visual aids or speeches to convey messages.