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.
B
You might also like to view...
Changes in aggregate demand
A) could be caused by changes in the spending decisions of the households, businesses, the government, and foreigners. B) are very uncommon. C) are unlikely to change quickly in response to economic events. D) are primarily based on changes in firms' abilities to produce products. E) are not affected by changes in government policies.
At any quantity at which the demand curve lies above the supply curve,
a. economic efficiency is achieved b. the cost of producing the last unit exceeds its value to some consumer c. marginal cost exceeds the market price d. the market is Pareto efficient e. the value of the last unit to some consumer exceeds the cost of producing it