If the Fed Decreases the Required Reserve Ratio at a Time

question 55

Multiple Choice

If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves,the Fed is:

• A)forcing banks to increase the money supply.
• B)forcing banks to decrease the money supply.
• C)making it possible for banks to increase the money supply but not forcing them to do so.
• D)making it possible for banks to decrease the money supply but not forcing them to do so.
• E)conducting open market operations but not changing the money supply.

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Definitions:

Internal Centralized

A management structure where decisions are made by a few key individuals or a central body within the organization.

Support Department

A segment within an organization that does not directly add to profit but provides essential services for other departments.

Profit Center

A segment or department within a business that is responsible for generating its own revenue and profit, assessed separate from other areas of the company.

Revenues

The total amount of money received by the company for goods sold or services provided during a certain time period.