When the Fed Decreases the Required Reserve Ratio, Then The

question 3

Multiple Choice

When the Fed decreases the required reserve ratio, then the:

• A) ability of banks to make loans is restricted.
• B) ability of banks to make loans is enhanced.
• C) ability of banks to make loans is unaffected.
• D) interest rate that banks pay to the Fed to borrow money is reduced.
• E) interest rate that banks pay other banks to borrow money is decreased.

---

Definitions:

Squeeze Out Profits

Strategies or actions taken by companies to increase profit margins, often by reducing costs or increasing efficiency, sometimes under competitive pressure.

Graph Drawing

A method of representing structural information as diagrams of abstract graphs and networks.

Short Run

A period in which at least one of a firm's inputs is fixed and cannot be changed, influencing production and costs.

Graph Drawing

The process of representing data visually using lines, bars, or other symbols on a graph to illustrate relationships or trends.