When the Fed decreases the required reserve ratio, then the:
a. ability of banks to make loans is restricted.
b. ability of banks to make loans is enhanced.
c. ability of banks to make loans is unaffected.
d. interest rate that banks pay to the Fed to borrow money is reduced.
e. interest rate that banks pay other banks to borrow money is decreased.
b
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When used in a professional or technical sense, the law of supply and demand refers to
a. some vague influences on economic affairs. b. the fact that prices go up when commodities are scarce. c. the market forces that show how prices and quantities are determined. d. the controls that regulate the amount of scarce goods that each consumer can purchase.
Contractionary monetary policy on the part of the Fed results in
A) an increase in the money supply, an increase in interest rates, and an increase in GDP. B) a decrease in the money supply, an increase in interest rates, and a decrease in GDP. C) an increase in the money supply, a decrease in interest rates, and an increase in GDP. D) a decrease in the money supply, a decrease in interest rates, and a decrease in GDP.