If the Fed Increases the Required Reserve Ratio at a Time

question 221

Multiple Choice

If the Fed increases the required reserve ratio at a time when banks are holding excess reserves,

• A)it forces banks to increase the money supply
• B)it forces banks to decrease the money supply
• C)it makes it possible for banks to increase the money supply but does not force them to do so
• D)the money supply will not increase as much as if the Fed left the reserve ratio alone
• E)it is conducting open market operations but not changing the money supply

---

Definitions:

Legitimate Power

A form of authority where power is given to an individual due to their position and responsibilities within an organization.

Cognitive Ability

The capacity of an individual to perform various mental activities related to learning, problem-solving, and decision-making.

Creative Thinking

The ability to generate new and original ideas or solutions to problems.

Shared Goals

Objectives or ambitions that are pursued by multiple people or entities, working collaboratively towards achieving these common aims.