The Fed Has Tended Not to Use Changes in the Reserve

question 86

Multiple Choice

The Fed has tended not to use changes in the reserve requirement as a means of controlling the money supply because

• A)only banks that are members of the Fed are subject to reserve requirements,and most banks do not belong to the Fed.
• B)a change in the reserve requirement has only a very small impact on the money supply.
• C)it is a crude monetary policy tool because a change in the requirement does not affect banks until about two weeks after the change is implemented.
• D)it takes a long time for the Congress to approve a change in the reserve requirement.

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Definitions:

Recessive

A genetic characteristic that is expressed in an organism's phenotype only when two copies of the gene responsible for the trait are present.

Phenotype

The observable physical or biochemical characteristics of an organism, as determined by both genetic makeup and environmental influences.

Homozygous

Referring to an individual having two identical alleles for a particular gene or trait.

Genotype

The genetic makeup of an organism, consisting of both visible and non-visible traits, which lays the foundation for the organism's phenotype.