The Fed's Power to Set the Required Reserves of Commercial

question 113

Multiple Choice

The Fed's power to set the required reserves of commercial banks:

• A) provides a certain source of interest income for commercial banks.
• B) allows the Fed to control the lending ability of commercial banks and, thereby, control the money supply.
• C) prevents banks from hoarding too much vault cash.
• D) prevents commercial banks from earning excess profits.

---

Definitions:

Stream Flow

The movement of water within a river or stream channel, driven by gravity and influenced by rainfall, snowmelt, and terrain.

Average Rate

A mathematical calculation representing the change in a quantity divided by the change in another quantity, commonly used in physics and chemistry.

Average Rate

A calculated value that represents the central or typical value of a set of numbers, dividing the total by the number of values.

Movement

The action or process of changing position or place.