If the Fed Increases the Required Reserve Ratio at a Time

question 221

Multiple Choice

If the Fed increases the required reserve ratio at a time when banks are holding excess reserves,

• A)it forces banks to increase the money supply
• B)it forces banks to decrease the money supply
• C)it makes it possible for banks to increase the money supply but does not force them to do so
• D)the money supply will not increase as much as if the Fed left the reserve ratio alone
• E)it is conducting open market operations but not changing the money supply

---

Definitions:

Absentmindedness

A state of forgetfulness or being easily distracted, often resulting from inattention or lack of focus.

Tip-of-the-tongue Phenomenon

A temporary inability to retrieve a word from memory, coupled with partial recall and the feeling that retrieval is imminent.

Interference

The phenomenon where the learning of new information hampers the ability to recall previously learned information.

Suggestibility

The susceptibility of individuals to accept and incorporate misinformation or ideas from others into their own memory and beliefs.