An Increase in the Required Reserve Ratio Would Be

question 159

Multiple Choice

An increase 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 total reserves in the banking system.
• D) an expansionary policy because it raises the amount of excess reserves in the banking system.
• E) an expansionary policy because it raises the amount of required reserves in the banking system.

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Definitions:

Elastic Supply

Refers to a situation where the quantity of a good supplied by producers changes significantly in response to a change in price.

Elasticities

A measure in economics that shows how much the quantity demanded or supplied of a good responds to changes in price, income, or other factors.

Tax Burden

The measure of taxes that an individual or business must bear, often expressed as a percentage of income or profit.

Legal Assignment

The transfer of a property right or title to some particular benefit, usually from one party to another, under the terms of a legal agreement.