If Banks Are Currently Holding Zero Excess Reserves and the Fed

question 95

Multiple Choice

If banks are currently holding zero excess reserves and the Fed raises the required reserve ratio,which of the following will happen?

• A) Banks will have a reserve deficiency.
• B) Banks will have positive excess reserves.
• C) Banks will begin to extend more loans.
• D) Banks will begin to extend more credit.
• E) b and d

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