A second or third worker may have a higher marginal product than the first worker in certain circumstances

The Federal Reserve responded to the 2008 financial crisis in several ways. Which of the following is one of the ways the Fed responded?

A) The Fed helped Citibank to acquire General Motors and Chrysler. B) The Fed lowered the required reserve ratio on demand deposit accounts in order to increase the amount of bank reserves. C) The Fed banned investment banks from obtaining discount loans. D) The Fed lent investment banks Treasury securities in exchange for mortgage-backed securities.

If the Fed lowers the reserve requirement, then this

A) decreases excess reserves, causes banks to reduce their loans, and decreases the money supply. B) increases excess reserves, encourages banks to make more loans, and increases the money supply. C) decreases excess reserves, causes banks to reduce their loans, and increases the money supply. D) increases excess reserves, causes banks to reduce their loans, and increases the money supply.