Which of the Following Events Would Reduce the Size of the "Real-World

question 110

Multiple Choice

Which of the following events would reduce the size of the "real-world" money multiplier?

• A) Banks hold more excess reserves.
• B) Households hold less currency.
• C) The Fed increases the discount rate.
• D) The Fed reduces the required reserve ratio.

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Definitions:

Percentage Point

A percentage point is a unit for expressing differences in percentages, helping to clarify changes in percent values over time by denoting the absolute difference between them.

Standard and Poor's

A financial services company known for its stock market indices such as the S&P 500, as well as its rating services for bonds and other securities.

Stock Split

Issue by a corporation of a given number of shares in exchange for shares currently held by stockholders. A split increases the number of shares outstanding. A reverse split decreases the number outstanding.

Divisor

A number by which another number is to be divided.