In the Market for Bank Reserves, If the Target Rate

question 21

Multiple Choice

In the market for bank reserves, if the target rate is higher than the cash rate, the Reserve Bank will take action to ________ reserves.

• A) increase the demand for
• B) decrease the demand for
• C) decrease the supply of
• D) increase both the demand for and the supply of
• E) increase the supply of

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Definitions:

Central

Serving as the most important or core part of something.

Efferent

Referring to nerve fibers that carry impulses away from the central nervous system to effectors (such as muscles or glands).

Afferent

Relating to or denoting nerve fibers that carry sensory information toward the central nervous system.

Central

Being at the most important or core position; of primary importance or relevance.