When the Required Reserve Ratio Is Changed

question 231

Multiple Choice

When the required reserve ratio is changed,

• A) the money multiplier is changed but the amount of excess reserves in the banking system is unchanged.
• B) the money multiplier is unchanged but the amount of excess reserves in the banking system is changed.
• C) the size of the money multiplier and the amount of excess reserves change in the opposite direction from the required reserve ratio.
• D) the size of the money multiplier and the amount of excess reserves change in the same direction as the required reserve ratio.
• E) neither the money multiplier nor the amount of excess reserves change.

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Definitions:

Mixed Strategy Equilibrium

A solution concept in game theory where players choose a probability distribution over possible actions, ensuring no player can benefit from changing their strategy unilaterally.

Company Policy

A set of principles, rules, or guidelines formulated or adopted by a company to achieve its long-term goals and manage its internal affairs.

Money Value

The purchasing power of money, which can be affected by inflation and the general price level of goods and services.

Arthur

In the context of economics, Arthur does not directly relate to a specific key term; in other contexts, it could refer to a person's name or a historical figure.