If the Fed Wanted to Shift to a Restrictive Monetary

question 185

Multiple Choice

If the Fed wanted to shift to a restrictive monetary policy and reduce the money supply, it could

• A) decrease the reserve requirements imposed on commercial banks.
• B) purchase U.S. government securities and other financial assets in the open market.
• C) decrease the interest rate on loans extended to banks and other financial institutions.
• D) increase the interest rate paid on excess reserves encouraging banks to hold excess reserves rather than extend more loans.

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Definitions:

Semicomatose

A state of semi-consciousness where an individual is partially aware but unable to respond fully to stimuli.

Sensory Deprivation

The intentional reduction or removal of stimuli from one or more of the senses, which can lead to increased sensitivity in other areas or various psychological effects.

Paraplegia

A condition characterized by the partial or complete paralysis of the lower limbs and trunk, often resulting from spinal cord injury.