If Banks Have No Excess Reserves, and the Required Reserve

question 55

Multiple Choice

If banks have no excess reserves, and the required reserve ratio is raised, the amount that banks can lend is:

• A) reduced and the money supply contracts.
• B) reduced and the money supply expands.
• C) reduced and there is no change in the money supply.
• D) increased and the money supply expands.

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Definitions:

Qualified Engineers

Individuals who have met the education, experience, and examination requirements to perform engineering tasks and services.

Domestic Industry

Industries that produce goods and services within a country’s borders, as opposed to foreign or international markets.

Quota

Limit set on the amounts of particular products that can be imported.