Which of the Following Best Describes the Consequences of a Decrease

question 171

Multiple Choice

Which of the following best describes the consequences of a decrease in the reserve requirements in a fractional reserve system?

• A)Both the money multiplier and the money supply increase.
• B)Both the money multiplier and the money supply decrease.
• C)The money multiplier increases, but the money supply decreases.
• D)The money multiplier decreases, but the money supply increases.

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Definitions:

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for the United States' monetary policy.

Restrictive Indorsement

An endorsement on a negotiable instrument that limits the way the instrument can be further transferred or conditions under which it can be cashed.

Personal Defenses

Legal strategies individuals use to challenge accusations or claims brought against them in court.

Inducement

The act of persuading or influencing someone to act, often involving an incentive or reward.