When the Reserve Requirement Is Increased

question 75

Multiple Choice

When the reserve requirement is increased,

• A) required reserves are changed into excess reserves.
• B) the excess reserves of banks are increased.
• C) a single commercial bank can no longer lend dollar-for-dollar with its excess reserves.
• D) the excess reserves of banks are reduced.

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Definitions:

Capital Gains

The increase in value of an investment over its purchase price.