When the Fed Decreases Reserve Requirements, If the Ratio of Currency

question 27

Multiple Choice

When the Fed decreases reserve requirements, if the ratio of currency to deposits decreases also while the monetary base is constant, then:

• A)it cannot be determined whether the money supply increases or decreases.
• B)the money supply increases.
• C)the money supply decreases.
• D)the two changes exactly offset each other.

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Definitions:

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about various aspects of life.

Palpitations

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Concentrating

The action of focusing one's attention or mental effort on a specific object, task, or activity.

Visual Material

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