A Decrease in the Required Reserve Ratio Would Be

question 122

Multiple Choice

A decrease in the required reserve ratio would be

• A) a restrictive policy because it lowers the amount of total reserves in the banking system.
• B) a restrictive policy because it lowers the amount of excess reserves in the banking system.
• C) an expansionary policy because it raises the amount of required reserves in the banking system.
• D) an expansionary policy because it raises the amount of total reserves in the banking system
• E) an expansionary policy because it raises the amount of excess reserves in the banking system.

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Definitions:

Keynes

Refers to the economic theories and policies advocated by John Maynard Keynes, which emphasize government intervention to manage economic cycles and stimulate economy-wide demand.

Classical School

An economic theory originating in the late 18th century, emphasizing free markets, competition, and the minimal role of government in the economy.

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A severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States and leading to significant declines in industrial production, mass unemployment, and deflation.

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