Based on the Situation Depicted in the Graph Below, Which

question 97

Multiple Choice

Based on the situation depicted in the graph below, which of the following would be an appropriate monetary policy response?​

• A)​decrease reserve requirements
• B)​decrease the discount rate
• C)​buy government bonds
• D)​none of the above

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Definitions:

Required Reserve Ratio

Percentage of deposits that must be held as vault cash and reserve deposits by all depository institutions.

Monetary Multiplier

A factor by which a change in money supply is magnified or multiplied to result in a change in national income and output.

Actual Reserves

The total amount of funds that a bank has in its vault or deposited with the central bank, available to meet withdrawal demands or regulatory requirements.

Federal Reserve Banks

The regional banks of the Federal Reserve System, the central bank of the United States, which regulate and serve banks, execute monetary policy, and provide financial services.