If the Quantity of Bank Reserves Held at the Fed

question 108

Multiple Choice

If the quantity of bank reserves held at the Fed increases,________.

• A) banks make more loans
• B) bank deposits decrease
• C) the real interest rate increases
• D) the M2 measure of money decreases

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Definitions:

Trade Surplus

A situation in which a country's exports exceed its imports, leading to a positive balance of trade.

Export

Goods or services sold by a country to another country, contributing positively to the selling country's balance of trade.

C + I + G Curve

An economic model representing the total spending in an economy, comprising Consumption (C), Investment (I), and Government Expenditures (G).

Regressive Tax

A taxation mechanism where the tax rate effectively decreases as the taxable amount (income or assets) increases, placing a higher relative burden on lower earners.