Other Things Equal, If the Required Reserve Ratio Was Lowered

question 51

Multiple Choice

Other things equal, if the required reserve ratio was lowered,

• A) banks would have to reduce their lending.
• B) the size of the monetary multiplier would increase.
• C) the actual reserves of banks would increase.
• D) the federal funds interest rate would rise.

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Definitions:

Boolean

A binary system that represents values and logical operations using true (1) and false (0) states.

Parallel

Refers to lines or paths that remain the same distance apart over their entire length, never intersecting, or in electronics, to components connected side-by-side, allowing current to divide among paths.

Ladder Diagram

A graphical representation of an electrical control circuit, laid out in a form resembling a ladder.

Pushbutton

A simple switch mechanism for controlling some aspect of a machine or a process, typically operated by pressing a button.