If the Demand for Reserves Is Unchanged, an Increase in the Quantity

question 52

Multiple Choice

If the demand for reserves is unchanged, an increase in the quantity of reserves will

• A) increase the federal funds rate.
• B) lower the federal funds rate.
• C) not affect the federal funds rate.
• D) None of the above answers is correct.

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Definitions:

Price

The sum of money needed to buy a product, service, or asset.

Quantity

The quantity of a tangible or intangible product or service.

Inelastic Region

The inelastic region on a demand curve represents a range where a change in price has little to no effect on the quantity demanded of a good or service.

Demand Curve

A graphical representation showing how the quantity demanded of a good or service varies with its price, ceteris paribus.