Other Things the Same,which of the Following Responses Would We

question 155

Multiple Choice

Other things the same,which of the following responses would we expect from an increase in U.S.interest rates?

• A)Your aunt puts more money in her savings account.
• B)Foreign citizens decide to buy fewer U.S.bonds.
• C)You decide to purchase a new oven for your cookie factory.
• D)All of the above are correct.

---

Definitions:

Reserve Requirement

The minimum amount of reserves a bank is mandated to hold by central banking authorities, akin to the reserve ratio.

Reserve Ratio

A central bank regulation that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves rather than lending out.

Reserve Requirement

The portion of depositor's balances that banks must have on hand as cash or in deposits with the central bank, a tool used by central banks to control the money supply.

Reserve Requirement

The lowest sum of money that a bank is required to keep as reserves against the deposits it holds, as mandated by the central bank.