What Would Be the Result If the Target Reserve Ratio

question 7

Multiple Choice

What would be the result if the target reserve ratio was lowered?

• A)The actual reserves of banks would increase.
• B)The size of the money multiplier would increase.
• C)Banks would be forced to call in loans.
• D)The actual reserves of banks would decrease.
• E)The size of the money multiplier would decrease.

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Definitions:

Shares

Holdings in a corporation or financial asset, these units confer rights to an equitable distribution of dividends from declared profits.

Quarterly Dividend

A dividend paid by a company to its shareholders every quarter, representing a portion of the company's earnings.

Capital Gains

The profit earned from the sale of an asset or investment which has increased in value over the holding period.

Shares

Units of ownership in a company or financial asset that represent a portion of the total capital.