If the Fed Lowered the Required Reserve Ratio

question 221

Multiple Choice

If the Fed lowered the required reserve ratio,

• A) excess reserves would decrease
• B) the money supply would decrease
• C) the money supply would increase
• D) banks would borrow more from the Fed
• E) loans would earn more interest.

---

Definitions:

Intelligence

The ability to acquire knowledge, understand complex ideas, adapt to environments, learn from experiences, and apply reasoning in problem-solving.

Relationship

The way in which two or more people or things are connected, or the state of being connected.

Convergent Thinking

A thought process that narrows in on a single, correct solution to a problem, emphasizing analytical and logical reasoning.

Divergent Thinking

A thought process or method used to generate many creative ideas by exploring many possible solutions, often in a spontaneous, free-flowing manner.