If Commercial Banks Are Maintaining a 4 Percent Reserve/deposit Ratio

question 40

Multiple Choice

If commercial banks are maintaining a 4 percent reserve/deposit ratio and the Fed raises the required reserve ratio to 6 percent, then banks will ________ their loans based on current deposits, and the money supply will ________.

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

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Definitions:

Sexual Excitation

The arousal and increased physiological and sexual interest that can arise from psychological or physical stimuli.

Ovulation

The process in the female menstrual cycle where a mature egg is released from the ovary, making it available for fertilization.

LH

Luteinizing hormone, a hormone secreted by the anterior pituitary gland that plays a key role in controlling the function of ovaries in women and testes in men.

Corpus Luteum

A temporary endocrine structure in female ovaries, formed after ovulation, which secretes hormones, primarily progesterone, to maintain early pregnancy.