Suppose Banks Decide to Hold More Excess Reserves Relative to Deposits.Other

question 16

Multiple Choice

Suppose banks decide to hold more excess reserves relative to deposits.Other things the same,this action will cause the

• A)money supply to fall.To reduce the impact of this the Fed could sell Treasury bonds.
• B)money supply to fall.To reduce the impact of this the Fed could buy Treasury bonds.
• C)money supply to rise.To reduce the impact of this the Fed could sell Treasury bonds.
• D)money supply to rise.To reduce the impact of this the Fed could buy Treasury bonds.

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Definitions:

Valid Inference

A logical conclusion that follows the premises stated in a way that is structurally sound and true according to the rules of logic.

Fallacy of Division

A logical fallacy that arises when one assumes that something true of a whole must also be true of its parts.

False Conclusion

A statement or resolution that does not logically follow from the given premises or evidence.

Premises

Statements or propositions that are taken as true and used as the basis for an argument leading to a conclusion.