The Fed's Power to Set the Required Reserves of Commercial

question 113

Multiple Choice

The Fed's power to set the required reserves of commercial banks:

• A) provides a certain source of interest income for commercial banks.
• B) allows the Fed to control the lending ability of commercial banks and, thereby, control the money supply.
• C) prevents banks from hoarding too much vault cash.
• D) prevents commercial banks from earning excess profits.

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Definitions:

Economic Gain

The increase in economic wealth or benefit, typically measured in terms of profit, revenue growth, or asset value.

Self-interest

The motivation based on one's own benefit or advantage, often considered as the primary motivating factor behind human actions.

Productivity

The measure of efficiency in which goods and services are produced, often assessed through output per unit of input (like labor, time, or cost).

Unconscious Mind

The part of the mind that is not in current awareness but influences thoughts, feelings, actions, and behaviors without one's conscious realization.