To Increase the Money Supply Using the Reserve Requirements, What

question 126

Multiple Choice

To increase the money supply using the reserve requirements, what would the Fed typically do?

• A) increase the reserve requirement for banks
• B) reduce the reserve requirement for banks
• C) make each bank set its own reserve levels
• D) let each bank get more currency from the Treasury

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Definitions:

Marginal Rate

Often referred to in the context of taxes or production, indicating the rate of increase or the additional cost or benefit of producing one more unit of a good.

Technical Substitution

The process of replacing one input or factor of production with another to maintain the same level of output.

Marginal Product

The additional output that results from adding one more unit of a specific input, keeping all other inputs constant.

Slope

In mathematics and economics, it represents the rate at which one variable changes over the change in another variable, often depicted in graph form.