The Fed Increases the Reserve Requirement,but It Wants to Offset

question 93

Multiple Choice

The Fed increases the reserve requirement,but it wants to offset the effects on the money supply.Which of the following should it do?

• A)sell bonds to increase reserves
• B)sell bonds to decrease reserves
• C)buy bonds to increase reserves
• D)buy bonds to decrease reserves

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Definitions:

Predisposed

Having a tendency or inclination to a specific behavior, action, or disease, often due to genetic or environmental factors.

Obesity

A medical condition characterized by excessive body fat that presents a risk to health.

Set Point

The theory proposing that individuals have a genetically determined range of weight and temperature that their body regulates and maintains.

Calorie Intake

The total amount of calories consumed through eating and drinking over a period of time.