Suppose the Federal Reserve Wanted to Reduce the Money Supply

question 57

Multiple Choice

Suppose the Federal Reserve wanted to reduce the money supply without using open-market operations.It could try to get the public to ________ their currency-deposit ratio and ________ banks' reserve requirements,which would in turn change the banks' reserve-deposit ratio.

• A)decrease; lower
• B)decrease; raise
• C)increase; lower
• D)increase; raise

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Definitions:

Consideration

An item of worth provided by each party involved in a contract, motivating them to agree to swap obligations reciprocally.

Ownership Right

The legal right to possess, use, control, and dispose of property or an asset.

Possessory Right

This term refers to the right of an individual or entity to possess or control a certain property or asset.

Mislaid

Property that is placed somewhere intentionally and then forgotten by the owner, distinguishing it from lost or stolen property.