If the Fed Decreases the Required Reserve Ratio at a Time

question 55

Multiple Choice

If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves,the Fed is:

• A)forcing banks to increase the money supply.
• B)forcing banks to decrease the money supply.
• C)making it possible for banks to increase the money supply but not forcing them to do so.
• D)making it possible for banks to decrease the money supply but not forcing them to do so.
• E)conducting open market operations but not changing the money supply.

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Definitions:

Binomial Probability Distribution

A probability distribution detailing the chances of a variable assuming one of two independent values based on specific parameters or assumptions.

Normal Probability Distribution

A bell-shaped probability distribution characterized by its mean and standard deviation, describing how random variables are distributed.

Total Area

The sum of all areas covered by a given shape or surface.

Normally Distributed

Describes a distribution that is symmetric around the mean, bell-shaped, and characterized by its mean and standard deviation.