The Quantity of Reserves Supplied Increases as Interest Rates Rise

question 33

Multiple Choice

The quantity of reserves supplied increases as interest rates rise because

• A)the Treasury borrows more at higher interest rates.
• B)consumers don't want to borrow as much so more money is left in banks.
• C)as interest rates rise, banks fear losses so they decrease lending.
• D)banks find it more profitable to loan out excess reserves to other banks.

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Definitions:

Unemployment

The situation of being without a job, while actively looking for one.

Unemployment Insurance

A social welfare program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.

Minimum-Wage Law

Legislation that establishes the minimum amount per hour that employers must pay their employees.

Labor Shortage

A condition in which employers do not have enough employees to fill the available job vacancies.