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:

Mental Processes

The operations of the mind that underlie thinking, feeling, perceiving, and remembering.

Intervening Variable

A hypothetical variable used to explain the relationship between variables, mainly in psychological research.

Food Deprivation

The condition of being without enough food to eat, which can lead to malnutrition and a host of physical and cognitive issues.

Carbohydrates

Organic compounds made up of carbon, hydrogen, and oxygen atoms that serve as a major energy source for the body.