Lowering the Reserve Ratio

question 97

Multiple Choice

Lowering the reserve ratio:

• A) Increases the total reserves in the banking system
• B) Also reduces the discount rate
• C) Turns required reserves into excess reserves
• D) Reduces the amount of excess reserves the banks keep

---

Definitions:

Short-Term Memory

The capacity to hold a small amount of information in mind in an active, readily available state for a short period of time.

Capacity

The maximum amount that something can contain or produce, or the ability of an individual or system to execute tasks or processes.

Iconic Memories

A type of visual memory that lasts a very short time, representing an exact replica of an observed scene or object.

Echoic Memories

A type of sensory memory that retains audio information for up to a few seconds after the original sound has ceased.