During a Recession, When Banks Tend to Increase Their Excess

question 150

True/False

During a recession, when banks tend to increase their excess reserves, the money supply M1 decreases.

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Definitions:

Price Ceiling

A legally established maximum price that can be charged for a good or service.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to buy at a specific price.

Market Equilibrium

A situation in a market where the quantity of a product demanded by consumers equals the quantity supplied by producers.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or resource, typically set below the equilibrium price.