Increasing the Required Reserve Ratio Is

question 169

Multiple Choice

Increasing the required reserve ratio is

• A)a contractionary policy because it lowers the amount of total reserves in the banking system
• B)a contractionary policy because it lowers the amount of excess reserves in the banking system
• C)an expansionary policy because it raises the amount of total reserves in the banking system
• D)an expansionary policy because it raises the amount of excess reserves in the banking system
• E)an expansionary policy because it raises the amount of required reserves in the banking system

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Definitions:

Disposable Income

Disposable income for households to spend or save after accounting for income taxes.

Autonomous Consumption

The level of consumption spending that occurs when income is zero, representing the expenditures necessary for basic needs.

APC

Absolute Plate Count, a method used in microbiology to estimate the total number of viable bacteria in a sample. If this is not the intended context, then NO.

Induced Consumption

The portion of spending by households that increases with their income, demonstrating how consumer spending is influenced by changes in income.