If the Federal Reserve eliminated all reserve requirements the most likely result would be
A) a large number of depository institution failures because they would not have enough liquidity.
B) the Federal reserve would be unable to control the money supply.
C) banks would no longer be able to clear checks at the Federal Reserve because there would be no required reserves.
D) the size of the money multiplier might fluctuate considerably making the Federal Reserve's job of controlling the money supply more difficult.
D
You might also like to view...
Over the last 100 years, real GDP per person in the United States has grown at an average rate of approximately 2 percent per year
Indicate whether the statement is true or false
Market power is illegal
A) True, no one is allowed to charge a price greater than marginal cost. B) False, firms can freely choose their prices. C) True, no one is allowed to charge a price greater than average cost. D) False, because market power guarantees price equal to average cost.