If the Fed Decreases the Required Reserve Ratio at a Time

question 55

Multiple Choice

If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves,the Fed is:

• A)forcing banks to increase the money supply.
• B)forcing banks to decrease the money supply.
• C)making it possible for banks to increase the money supply but not forcing them to do so.
• D)making it possible for banks to decrease the money supply but not forcing them to do so.
• E)conducting open market operations but not changing the money supply.

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