An Increase in the Reserve Requirement

question 39

Multiple Choice

An increase in the reserve requirement

• A)increases the money multiplier and increases the money supply.
• B)reduces the money multiplier and reduces the money supply.
• C)increases the money multiplier and reduces the money supply.
• D)none of these.

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Definitions:

RRSP

Registered Retirement Savings Plan, a retirement savings and investing vehicle for employees and the self-employed in Canada that provides tax benefits.

Contributions

Payments or investments made into a scheme, plan, or project by individuals or entities.

Compounded Monthly

A procedure where interest calculations are done monthly, taking into account not only the initial principal sum but also the interest accrued over prior periods.

Beginning of Each Month

The first day of each month in a calendar year.