Operating Under Severe Recessionary Conditions, the Federal Reserve System Decides

question 127

Multiple Choice

Operating under severe recessionary conditions, the Federal Reserve System decides to reduce its reserve requirements from the current level of 9 percent to 7.5 percent. Which of the following is likely to happen following the Fed's move?

• A) The rate of unemployment will double.
• B) The rate of growth in the economy will fall drastically.
• C) It increases the availability of credit with the commercial banks.
• D) Businesses will find it difficult to borrow at cheaper rates of interest.

---

Definitions:

Expertise

The skill, knowledge, and experience possessed by an individual or group in a particular field or domain.

Attractiveness

The quality of being appealing, pleasing, or desirable to others in terms of physical appearance, personality, or other traits.

Trustworthiness

The quality of being reliable, truthful, and able to be trusted.

Attitude Formation

The process by which individuals develop their viewpoints and feelings towards objects, people, or events.