What Is Achieved by Having an Upward Adjustment in Reserve

question 17

Multiple Choice

What is achieved by having an upward adjustment in reserve requirements?

• A) The money multiplier is increased, lowering inflation.
• B) It reduces the stock of money that can be supported by a given amount of reserves.
• C) The money multiplier is decreased.
• D) Both b and c, which may help moderate inflation.

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Definitions:

Perfectly Price Discriminate

A pricing strategy where a seller charges the maximum price that each individual consumer is willing to pay, thus capturing all possible consumer surplus.

Deadweight Losses

Economic inefficiencies that occur when the allocation of resources is not optimal, resulting from distortions in the market such as taxes, subsidies, or monopolies.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that each buyer is willing to pay, thus capturing the entire consumer surplus as profit.

Total Revenue

The total income received by a firm from its sales of goods or services before any costs or expenses are deducted.