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

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Definitions:

Generalized Anxiety Disorder

A mental health condition characterized by excessive, unrealistic worry and tension, even if there is little or nothing to provoke the anxiety.

Oversensitivity

An exaggerated response to external stimuli, which can be emotional, physical, or both.

Particular Object

A specific item or entity that is singled out or distinguished from others in its group or category.

Phobias

Extreme or irrational fears of specific objects, situations, or activities, often leading to avoidance behavior.