An Increase in the Required Reserve Ratio by the Federal

question 53

Multiple Choice

An increase in the required reserve ratio by the Federal Reserve would:

• A) cause M1 to contract.
• B) cause M1 to expand.
• C) have no effect on M1 or M2.
• D) affect only M2, not M1.

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The value of the best alternative foregone in making any decision.

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